Energy Services of America CORP 10-K

ITEM 9A. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that Energy Services files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. (b) Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that: (1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management has used the framework set forth in the report entitled “Internal Control–Integrated Framework 2013” published by the Committee of Sponsoring Organizations of the Treadway Commission to evaluate the effectiveness of the Company’s internal control over financial reporting. Management has not identified any material weakness in the Company’s internal control over financial reporting. Management has concluded that the Company’s internal control over financial reporting was effective as of the end of the most recent the fiscal year. 33 Table of Contents This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only Management’s report in this Annual Report. (c) Changes in Internal Controls Over Financial Reporting There has been no change in Energy Services of America Corporation’s internal control over financial reporting during Energy Services of America Corporation’s fourth quarter of the fiscal year 2022, that has materially affected, or is reasonably likely to materially affect, Energy Services of America Corporation’s internal control over financial reporting. ITEM 9B. Other Information None. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not Applicable. PART III ITEM 10. Directors, Executive Officers and Corporate Governance The Company has adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Code of Ethics was previously filed as an exhibit to our Registration Statement on Form S-1. A copy of the Code will be furnished without charge upon written request to the Corporate Secretary, Energy Services of America Corporation, 75 West 3 rd Ave., Huntington, West Virginia 25701. The information contained under the sections captioned “Proposal I – Election of Directors” in the Company’s definitive Proxy Statement for the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of September 30, 2022 (the “Proxy Statement”) is incorporated herein by reference. ITEM 11. Executive Compensation The information contained under the section captioned “Proposal I – Election of Directors – Executive and Director Compensation” in the definitive Proxy Statement is incorporated herein by reference. ​ ​ ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters (a) Securities Authorized for issuance under Stock-Based Compensation Plans The following table presents certain information regarding our Equity Compensation Plan in effect as of September 30, 2022: ​ ​ ​ ​ ​ ​ ​ ​ Number of securities to be ​ Number of securities ​ ​ issued upon exercise of ​ Weighted average ​ remaining available for Plan ​ outstanding options and rights ​ exercise price ​ issuance under plan Equity compensation plans approved by stockholders — — 1,500,000 Equity compensations plans not approved by stockholders — — — Total — — 1,500,000 ​ (b) Security Ownership of Certain Beneficial Owners The information required by this item is incorporated herein by reference to the section captioned “Security Ownership of Certain Beneficial Owners” in the Proxy Statement. 34 Table of Contents (c) Security Ownership of Management The information required by this item is incorporated herein by reference to the section captioned “Proposal I – Election of Directors” in the Proxy Statement. (d) Changes in Control Management of the Company knows of no arrangements, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the registrant. ​ ​ ​ ITEM 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item is incorporated herein by reference to the sections captioned “Proposal I – Election of Directors – Certain Relationships and Related Transactions” and “– Board Independence” of the Proxy Statement. ITEM 14. Principal Accountant Fees and Services The information required by this item is incorporated herein by reference to the section captioned “Proposal II – Ratification of Independent Registered Public Accounting Firm” of the Proxy Statement. ​ 35 Table of Contents PART IV ITEM 15. Exhibits and Financial Statement Schedules The exhibits and financial statement schedules filed as a part of this Form 10-K are as follows: ​ ​ (a)(1) Consolidated Financial Statements ​ ​ ​ Energy Services of America Corporation ​ ​ ​ ​ Report of Independent Registered Public Accounting Firm (PCAOB ID 23 ) ​ F-1 ​ ​ Consolidated Balance Sheets, September 30, 2022 and September 30, 2021 . ​ F-4 ​ ​ Consolidated Statements of Income, Years Ended September 30, 2022 and September 30, 2021 . ​ F-5 ​ ​ Consolidated Statements of Cash Flows, Years Ended September 30, 2022 and September 30, 2021 . ​ F-6 ​ ​ Consolidated Statements of Changes in Shareholders’ Equity, Years Ended September 30, 2022 and September 30, 2021 . ​ F-7 ​ ​ Notes to Consolidated Financial Statements . ​ F-8 (a)(2) ​ Consolidated Financial Statement Schedules ​ ​ ​ ​ No financial statement schedules are filed because the required information is not applicable or is included in the consolidated financial statements or related notes. ​ ​ (a)(3) ​ Exhibits ​ ​ ​ ​ 36 Table of Contents Exhibit No. Description 3.1 ​ Amended and Restated Certificate of Incorporation (1) 3.2 ​ Bylaws (1) 3.3 ​ Certificate of Amendment to the Registrant’s Certificate of Incorporation (1) 3.4 ​ Certificate of Designations Series A Preferred Stock (4) 4.1 ​ Form of Certificate of Common Stock (1) 4.2 ​ Description of Common Stock (5) 10.1 ​ Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant (1) 10.2 ​ Form of Stock Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Initial Stockholders (1) 10.3 ​ Form of Letter Agreement between Chapman Printing Co. and the Registrant regarding administrative support (1) 10.4 ​ Form of Amended Registration Rights Agreement among the Registrant and the Initial Stockholders (1) 10.5 ​ Energy Services of America Corporation Employee Stock Purchase Plan (2) 10.6 ​ Severance Agreement, Waiver and Release of all Claims with Robert N. Riddle, Jr. (7) 10.7 ​ Energy Services of America Corporation 2022 Equity Incentive Plan (8) 14 ​ Code of Ethics (1) 16.1 ​ Letter disclosing combination dated November 1, 2021, from Baker Tilly US, LLP (6) 16.2 ​ Letter of Agreement dated November 1, 2021, form Baker Tilly US, LLP (6) 21 ​ List of subsidiaries 23 ​ Consent of Baker Tilly US, LLP 31.1 ​ Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 ​ Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 ​ Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ​ ​ ​ 101.INS ​ XBRL Instance Document 101.SCH ​ XBRL Taxonomy Extension Schema Document 101.CAL ​ XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF ​ XBRL Taxonomy Extension Definition Linkbase Document 101.LAB ​ XBRL Taxonomy Extension Label Linkbase Document 101.PRE ​ XBRL Taxonomy Extension Presentation Linkbase Document (1) Incorporated by reference to the Registration Statement on Form S-1 of Energy Services of America Corp. (file no. 333-133111), originally filed with the Securities and Exchange Commission on April 7, 2006, as amended. (2) Filed as Appendix A to the Schedule 14-A filed with the Securities and Exchange Commission on October 16, 2008. (3) Filed as Appendix A to the Schedule 14-A filed with the Securities and Exchange Commission on July 2, 2010. (4) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 8, 2013. (5) Incorporated by reference to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 20, 2019. (6) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 5, 2021. (7) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 19, 2022. (8) Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 18, 2022. ​ (b) The exhibits listed under (a)(3) above are filed herewith. (c) Not applicable. ITEM 16. Form 10-K Summary None. ​ 37 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ​ ​ ​ ​ ​ ENERGY SERVICES OF AMERICA CORPORATION ​ ​ ​ Date: December 22, 2022 By: /s/ Douglas V. Reynolds ​ ​ Douglas V. Reynolds ​ ​ President and Chief Executive Officer ​ ​ (Duly Authorized Representative) ​ Pursuant to the requirements of the Securities Exchange of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. ​ ​ Name Position Date ​ ​ ​ ​ ​ ​ By /s/ Marshall T. Reynolds ​ Chairman of the Board ​ December 22, 2022 ​ Marshall T. Reynolds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ By /s/ Jack Reynolds ​ Director ​ December 22, 2022 ​ Jack R. Reynolds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ By /s/ Charles P. Crimmel ​ Chief Financial Officer ​ December 22, 2022 ​ Charles P. Crimmel ​ (Principal Financial and Accounting Officer) ​ ​ ​ ​ ​ ​ ​ ​ By /s/ Amy E. Abraham ​ Director ​ ​ ​ Amy E. Abraham ​ ​ ​ December 22, 2022 ​ ​ ​ ​ ​ ​ By /s/ Joseph L. Williams ​ Director ​ December 22, 2022 ​ Joseph L. Williams ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ By /s/ Mark S. Prince ​ Director ​ December 22, 2022 ​ Mark S. Prince ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ By /s/ Frank S. Lucente ​ Director ​ December 22, 2022 ​ Frank S. Lucente ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ By /s/ Patrick J. Farrell ​ Director ​ December 22, 2022 ​ Patrick J. Farrell ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ By /s/ Samuel G. Kapourales ​ Director ​ December 22, 2022 ​ Samuel G. Kapourales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ By /s/ Charles Abraham ​ Director ​ December 22, 2022 ​ Charles Abraham ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ By /s/ Douglas V. Reynolds ​ President and Chief ​ December 22, 2022 ​ Douglas V. Reynolds ​ Executive Officer, and Director ​ ​ ​ ​ ​ (Principal Executive Officer) ​ ​ ​ ​ ​ 38 Table of Contents ​ Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors Energy Services of America Corporation Huntington, West Virginia ​ Opinion on the Consolidated Financial Statements ​ We have audited the accompanying consolidated balance sheets of Energy Services of America Corporation and subsidiaries (the Company) as of September 30, 2022 and 2021, the related consolidated statements of income, changes in shareholders’ equity and cash flows, for each of the two years in the period ended September 30, 2022, and the related notes (collectively referred to as, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2022 and 2021, and the results of their operations and their cash flows for each of the two years in the period ended September 30, 2022, in conformity with accounting principles generally accepted in the United States of America. ​ Basis for Opinion ​ These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ ​ F-1 Table of Contents Critical Audit Matters ​ The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ​ Over-Time Revenue Recognition ​ Critical Audit Matter Description ​ As described in Notes 2 and 3 to the consolidated financial statements, the Company recognizes revenue from contracts with customers over time as performance obligations are satisfied and control of the promised good and service is transferred to the customer. The Company recognizes revenue on lump sum and unit price contracts by measuring the progress toward complete satisfaction of contractual performance obligations using an input method. For cost plus and time and material contracts, the Company recognizes revenue from contracts with customers over time as control is transferred to the customer by measuring progress toward complete satisfaction of the performance obligations using an output method. ​ We identified the evaluation of the Company’s estimates on significant construction contracts with customers and their effect on revenue recognition as a critical audit matter. The Company’s significant estimates include the determination of the performance obligations and allocation of transaction price and estimated costs to complete. Recognition of revenue and profit over time as performance obligations are satisfied for long-term lump sum and unit price contracts is highly judgmental as it requires the Company to prepare estimates of total contract revenue and total contract costs, including costs to complete in-process contracts. Auditing the Company’s estimates of total contract revenue and costs used to recognize revenue on construction contracts involved significant auditor judgement, as it required the evaluation of subjective factors such as assumptions related to project schedule and completion, forecasted labor, material and subcontract costs and variable consideration estimates related to incentive fees, unpriced change orders and contractual disputes and claims. These estimates are dependent upon significant management judgement, which affects the measurement of revenue recognized by the Company. ​ How We Addressed the Matter in Our Audit ​ The primary procedures we performed to address this critical audit matter included: ​ ● Evaluated the Company’s estimated revenue and costs to complete by obtaining and analyzing supporting documentation of management’s estimates of variable consideration and contract costs. ● Compared contract profitability estimates in the current year to historical estimates and actual performance. ● Tested samples of completed and in-process contracts and contract transactions by inspecting the underlying customer contracts, contract billing data, and contract cost source documentation, and evaluated the Company’s recognition of contract assets, liabilities, revenue, and costs of revenue in accordance with the Company’s revenue recognition policy. ​ ​ F-2 Table of Contents Valuation of Goodwill and Intangible Assets Associated with Business Combinations Critical Audit Matter Description ​ As described in Note 24 to the consolidated financial statements, the Company completed an asset purchase of Tri-State Paving & Sealcoating, LLC, for total consideration of $9.9 million during the year ended September 30, 2022. The acquisition was accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and the liabilities assumed to be recognized at their fair values as of the acquisition date. Auditing the accounting for these acquisitions was complex due to the significant estimation uncertainty in determining the fair values of assets acquired and liabilities assumed. ​ We identified the valuation of intangible assets recorded in connection with the acquisition as a critical audit matter. The fair value estimates were based on underlying assumptions about future performance of the acquired business which involves significant estimation uncertainty. The significant assumptions used to form the basis of the forecasted results included revenue growth rates, earnings metrics, and discount rates. These significant assumptions were forward-looking and could be affected by future economic and market conditions. ​ How We Addressed the Matter in Our Audit ​ The primary procedures we performed to address this critical audit matter included: ​ ● Reviewed the valuation report prepared by the valuation specialist engaged by management to assist in the purchase price allocation, including the determination of fair values assigned to acquired intangible assets, and assessed the qualifications and objectivity of management’s specialist. ● Engaged an internal valuation specialist to assist the engagement team in evaluating the appropriateness of the Company’s selection of the valuation model, including the evaluation of significant assumptions, including growth rates, discount rate and economic lives. ● Evaluated the reasonableness of assumptions used by management in the cash flow model, which included comparing the significant assumptions to current industry, market and economic trends, historical results of the Company’s business, other companies within the same industry, and evidence obtained in other areas of the audit. ● Tested the completeness and accuracy of the underlying data supporting the significant assumptions and estimates used in the valuation reports, including historical and projected financial information. ​ /s/ Baker Tilly US, LLP ​ We have served as the Company’s auditor since 2008. ​ Pittsburgh, Pennsylvania December 22, 2022 ​ F-3 Table of Contents ENERGY SERVICES OF AMERICA CORPORATION CONSOLIDATED BALANCE SHEETS As of September 30, 2022 and 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Assets ​ ​ ​ ​ Current assets ​ ​ ​ ​ Cash and cash equivalents ​ $ 7,427,474 ​ $ 8,226,739 Accounts receivable-trade ​ 38,525,223 ​ 21,092,517 Allowance for doubtful accounts ​ ( 70,310 ) ​ ( 70,310 ) Retainages receivable ​ 4,443,679 ​ 917,526 Other receivables ​ 10,866 ​ 543,328 Contract assets ​ 16,109,593 ​ 8,730,402 Prepaid expenses and other ​ 3,945,968 ​ 3,541,000 Total current assets ​ 70,392,493 ​ 42,981,202 ​ ​ ​ ​ ​ ​ ​ Property, plant and equipment, at cost ​ 73,736,433 ​ 61,145,705 less accumulated depreciation ​ ( 41,074,646 ) ​ ( 38,195,686 ) Total fixed assets ​ 32,661,787 ​ 22,950,019 ​ ​ ​ ​ ​ ​ ​ Right-of-use assets-operating lease ​ ​ 1,611,321 ​ ​ — Intangible assets, net ​ ​ 3,873,690 ​ ​ 2,425,923 Goodwill ​ ​ 4,087,554 ​ ​ 1,814,317 ​ ​ ​ ​ ​ ​ ​ Total assets ​ $ 112,626,845 ​ $ 70,171,461 ​ ​ ​ ​ ​ ​ ​ Liabilities and shareholders' equity ​ ​ ​ Current liabilities ​ ​ ​ Current maturities of long-term debt ​ $ 4,060,016 ​ $ 3,401,574 Lines of credit and short term borrowings ​ 13,080,320 ​ 5,040,250 Current maturities of operating lease liabilities ​ ​ 588,653 ​ ​ — Accounts payable ​ 20,314,408 ​ 7,285,392 Accrued expenses and other current liabilities ​ 11,266,008 ​ 5,599,702 Contract liabilities ​ 6,027,578 ​ 3,153,290 Total current liabilities ​ 55,336,983 ​ 24,480,208 ​ ​ ​ ​ ​ ​ ​ Long-term debt, less current maturities ​ 13,494,084 ​ 9,020,774 Long-term operating lease liabilities ​ ​ 1,015,624 ​ ​ — Deferred tax liability ​ 4,455,079 ​ 2,033,433 Total liabilities ​ 74,301,770 ​ 35,534,415 ​ ​ ​ ​ ​ ​ ​ Shareholders' equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred stock, $ .0001 par value Authorized 1,000,000 shares, 0 issued and outstanding at September 30, 2022 and 206 issued and outstanding at September 30, 2021 ​ — ​ — ​ ​ ​ ​ ​ ​ ​ Common stock, $ .0001 par value Authorized 50,000,000 shares, 17,885,615 issued and 16,667,185 outstanding at September 30, 2022 and 14,839,836 issued and 13,621,406 outstanding at September 30, 2021 ​ 1,789 ​ 1,484 ​ ​ ​ ​ ​ ​ ​ Treasury stock, 1,218,430 shares at September 30, 2022 and 2021 ​ ( 122 ) ​ ( 122 ) ​ ​ ​ ​ ​ ​ ​ Additional paid in capital ​ 60,508,350 ​ 60,670,699 Retained deficit ​ ( 22,184,942 ) ​ ( 26,035,015 ) Total shareholders' equity ​ 38,325,075 ​ 34,637,046 Total liabilities and shareholders' equity ​ $ 112,626,845 ​ $ 70,171,461 ​ The Accompanying Notes are an Integral Part of These Consolidated Financial Statements F-4 Table of Contents ENERGY SERVICES OF AMERICA CORPORATION CONSOLIDATED STATEMENTS OF INCOME For the years ended September 30, 2022 and 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Revenue ​ $ 197,590,000 ​ $ 122,465,826 ​ ​ ​ ​ ​ Cost of revenues ​ 175,219,252 ​ 109,544,804 ​ ​ ​ ​ ​ Gross profit ​ 22,370,748 ​ 12,921,022 ​ ​ ​ ​ ​ Selling and administrative expenses ​ 15,878,138 ​ 14,044,232 Income (loss) from operations ​ 6,492,610 ​ ( 1,123,210 ) ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ Interest income ​ 576 ​ 286,645 Paycheck Protection Program loan forgiveness ​ ​ — ​ ​ 9,839,100 Other nonoperating expense ​ ( 248,006 ) ​ ( 58,742 ) Interest expense ​ ( 887,931 ) ​ ( 557,320 ) Gain on sale of equipment ​ 755,470 ​ 681,653 ​ ​ ( 379,891 ) ​ 10,191,336 ​ ​ ​ ​ ​ Income before income taxes ​ 6,112,719 ​ 9,068,126 ​ ​ ​ ​ ​ Income tax expense (benefit) ​ 2,262,646 ​ ( 29,129 ) ​ ​ ​ ​ ​ Net income ​ 3,850,073 ​ 9,097,255 ​ ​ ​ ​ ​ Dividends on preferred stock ​ — ​ 284,238 ​ ​ ​ ​ ​ Net income available to common shareholders ​ $ 3,850,073 ​ $ 8,813,017 ​ ​ ​ ​ ​ Weighted average shares outstanding-basic ​ 16,323,790 ​ 13,621,406 ​ ​ ​ ​ ​ Weighted average shares-diluted ​ 16,323,790 ​ 16,988,424 ​ ​ ​ ​ ​ Earnings per share ​ ​ ​ ​ ​ ​ available to common shareholders ​ $ 0.24 ​ $ 0.65 ​ ​ ​ ​ ​ Earnings per share-diluted ​ ​ ​ ​ ​ ​ available to common shareholders ​ $ 0.24 ​ $ 0.52 ​ The Accompanying Notes are an Integral Part of These Consolidated Financial Statements ​ F-5 Table of Contents ENERGY SERVICES OF AMERICA CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended September 30, 2022 and 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Cash flows from operating activities: ​ ​ ​ ​ Net income ​ $ 3,850,073 ​ $ 9,097,255 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ Depreciation expense ​ 5,568,929 ​ 4,661,789 Paycheck Protection Program loan forgiveness ​ ​ — ​ ​ ( 9,839,100 ) Gain on sale of equipment ​ ( 755,470 ) ​ ( 681,653 ) Provision for deferred taxes ​ 2,421,646 ​ 211,677 Provision for loss on contract ​ ​ 248,770 ​ ​ — Amortization of intangible assets ​ ​ 444,565 ​ ​ 230,588 Amortization of operating lease right-of-use assets ​ ​ 98,711 ​ ​ — Accreted interest on operating lease right-of-use assets ​ ​ 11,802 ​ ​ — Accreted interest on notes payable ​ ​ 49,638 ​ ​ — Operating lease payments ​ ​ ( 117,558 ) ​ ​ — Increase in contracts receivable ​ ( 17,432,706 ) ​ ( 2,845,528 ) (Increase) decrease in retainage receivable ​ ( 3,526,153 ) ​ 1,566,283 Decrease (increase) in other receivables ​ 532,462 ​ ( 533,870 ) Increase in contract assets ​ ( 7,379,191 ) ​ ( 2,184,539 ) Decrease (increase) in prepaid expenses and other ​ 2,948,003 ​ ( 202,057 ) Increase in accounts payable ​ 13,029,016 ​ 2,063,170 Increase in accrued expenses and other current liabilities ​ 5,417,842 ​ 953,534 Increase (decrease) increase in contract liabilities ​ 2,874,288 ​ ( 1,698,610 ) Net cash provided by operating activities ​ 8,284,667 ​ 798,939 ​ ​ ​ Cash flows from investing activities: ​ ​ Acquisition of Revolt Energy ​ ​ — ​ ​ ( 150,000 ) Acquisition of West Virginia Pipeline, net of cash received of $ 250,000 ​ ​ — ​ ​ ( 3,250,000 ) Investment in property and equipment ​ ( 5,308,189 ) ​ ( 6,047,693 ) Acquisition of Ryan Environmental and Ryan Transport ​ ​ ( 4,042,057 ) ​ ​ — Proceeds from sales of property and equipment ​ 1,071,723 ​ 758,391 Net cash used in investing activities ​ ( 8,278,523 ) ​ ( 8,689,302 ) ​ ​ ​ Cash flows from financing activities: ​ ​ Preferred stock redemption ​ ( 1,210,525 ) ​ — Preferred dividends paid ​ — ​ ( 309,000 ) Borrowings on lines of credit and short-term debt, net of repayments ​ 4,687,099 ​ 8,030,407 Principal payments on long-term debt ​ ​ ( 4,281,983 ) ​ ​ ( 2,821,125 ) Net cash (used in) provided by financing activities ​ ( 805,409 ) ​ 4,900,282 ​ ​ ​ Decrease in cash and cash equivalents ​ ( 799,265 ) ​ ( 2,990,081 ) Cash and cash equivalents beginning of period ​ 8,226,739 ​ 11,216,820 Cash and cash equivalents end of period ​ $ 7,427,474 ​ $ 8,226,739 ​ ​ ​ Supplemental schedule of noncash investing and financing activities: ​ ​ Purchases of property & equipment under financing agreements ​ $ 549,455 ​ $ 3,349,139 Prepaid insurance premiums financed ​ $ 3,352,971 ​ $ 3,213,402 Note payable to finance West Virginia Pipeline acquisition ​ $ — ​ $ 3,000,000 Note payable to refinance short-term borrowing ​ $ — ​ $ 2,850,000 Accrued dividends on preferred stock ​ $ — ​ $ 52,488 Debt assumed in acquisitions for equipment ​ $ 390,445 ​ $ 205,829 Sellers' note Tri-State Paving acquisition ​ $ 936,000 ​ $ — Note payable to finance Tri-State Paving acquisition ​ $ 7,500,000 ​ $ — Common stock issued to finance Tri-State Paving acquisition ​ $ 1,048,218 ​ $ — Par value of common stock issued from preferred stock coversion ​ $ 263 ​ $ — Operating lease right-of-use assets ​ $ 1,710,032 ​ $ — ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flows information: ​ ​ Cash paid during the year for: ​ ​ Interest ​ $ 846,129 ​ $ 557,320 Income taxes ​ $ 50,231 ​ $ 251,996 ​ The Accompanying Notes are an Integral Part of These Consolidated Financial Statements ​ F-6 Table of Contents ENERGY SERVICES OF AMERICA CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY For the years ended September 30, 2022 and 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Common Stock ​ Additional Paid ​ Retained ​ Treasury ​ Shareholders' ​ Shares Amount in Capital Deficit Stock Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at September 30, 2021 ​ 13,621,406 ​ $ 1,484 ​ $ 60,670,699 ​ $ ( 26,035,015 ) ​ $ ( 122 ) ​ $ 34,637,046 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ — ​ — ​ — ​ 3,850,073 ​ — ​ 3,850,073 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred share redemption, net of accrued dividends ​ — ​ ​ — ​ ​ ( 1,210,525 ) ​ ​ — ​ ​ — ​ ​ ( 1,210,525 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred share conversion ​ 2,626,492 ​ 263 ​ — ​ — ​ — ​ 263 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shares issued for Tri-State Paving acquisition ​ 419,287 ​ 42 ​ 1,048,176 ​ — ​ — ​ 1,048,218 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at September 30, 2022 ​ 16,667,185 ​ $ 1,789 ​ $ 60,508,350 ​ $ ( 22,184,942 ) ​ $ ( 122 ) ​ $ 38,325,075 ​ ​ ​ ​ ​ ​ ​ Balance at September 30, 2020 ​ 13,621,406 ​ $ 1,484 ​ $ 60,670,699 ​ $ ( 34,848,032 ) ​ $ ( 122 ) ​ $ 25,824,029 ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ — ​ — ​ — ​ 9,097,255 ​ — ​ 9,097,255 ​ ​ ​ ​ ​ ​ ​ Accrued preferred dividends ​ — ​ — ​ — ​ ( 284,238 ) ​ — ​ ( 284,238 ) ​ ​ ​ ​ ​ ​ ​ ​ Balance at September 30, 2021 ​ 13,621,406 ​ $ 1,484 ​ $ 60,670,699 ​ $ ( 26,035,015 ) ​ $ ( 122 ) ​ $ 34,637,046 ​ The Accompanying Notes are an Integral Part of These Consolidated Financial Statements ​ F-7 Table of Contents ENERGY SERVICES OF AMERICA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BUSINESS AND ORGANIZATION: Energy Services of America Corporation (“Energy Services” or the “Company”), formed in 2006, is a contractor and service company that operates primarily in the mid-Atlantic and central regions of the United States and provides services to customers in the natural gas, petroleum, water distribution, automotive, chemical, and power industries. For the gas industry, the Company is primarily engaged in the construction, replacement and repair of natural gas pipelines and storage facilities for utility companies and private natural gas companies. Energy Services is involved in the construction of both interstate and intrastate pipelines, with an emphasis on the latter. For the oil industry, the Company provides a variety of services relating to pipeline, storage facilities and plant work. For the power, chemical, and automotive industries, the Company provides a full range of electrical and mechanical installations and repairs including substation and switchyard services, site preparation, equipment setting, pipe fabrication and installation, packaged buildings, transformers, and other ancillary work with regards thereto. 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. 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. The Company’s total outstanding common shares after redemption was 16,247,898 as of October 6, 2021. 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”. 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. 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. On August 11, 2022, Ryan Construction, 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. 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. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition The Company recognizes revenue as performance obligations are satisfied and control of the promised good and service is transferred to the customer. For Lump Sum and Unit Price contracts, revenue is ordinarily recognized over time as control is transferred to the customers by measuring the progress toward complete satisfaction of the performance obligation(s) using an input (i.e., “cost to cost”) method. For Cost Plus and Time and Material (“T&M”) contracts, revenue is ordinarily recognized over time as control is transferred to the customers by measuring the progress toward satisfaction of the performance obligation(s) using an output method. The Company does have certain service and maintenance contracts in which each customer purchase order is considered its own performance obligation recognized over time and would be recognized depending on the type of contract mentioned above. The Company also does certain T&M service work that is generally completed in a short duration and is recognized at a point in time. F-8 Table of Contents All contract costs, including those associated with affirmative claims, change orders and back charges, are recorded as incurred and revisions to estimated total costs are reflected as soon as the obligation to perform is determined. Contract costs consist of direct costs on contracts, including labor and materials, amounts payable to subcontractors and outside equipment providers, direct overhead costs and internal equipment expense (primarily depreciation, fuel, maintenance and repairs). The Company recognizes revenue, but not profit, on certain uninstalled materials. Revenue on these uninstalled materials is recognized when the cost is incurred (when control is transferred), but the associated profit is not recognized until the materials are installed. The costs of uninstalled materials are tracked separately within the Company’s accounting software. Pre-contract and bond costs, if required, and mobilization costs on projects are generally immaterial to the total value of the Company’s contracts and are expensed when incurred. As a practical expedient, the Company recognizes these incremental costs as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less. For projects expected to last greater than one year, mobilization costs are capitalized as incurred and amortized over the expected duration of the project. For these projects, mobilization costs will be tracked separately in the Company’s accounting software. This includes costs associated with setting up a project lot or lay-down yard, equipment, tool and supply transportation, temporary facilities and utilities and worker qualification and safety training. Contracts may require the Company to warranty that work is performed in accordance with the contract; however, the warranty is not priced separately, and the Company does not offer customers an option to purchase a warranty. Principles of Consolidation The consolidated financial statements of Energy Services include the accounts of Energy Services, its wholly owned subsidiaries West Virginia Pipeline, SQP, Ryan Construction, Tri-State Paving and C.J. Hughes and its subsidiaries, Contractors Rental, Nitro, and Pinnacle. All significant intercompany accounts and transactions have been eliminated in the consolidation. Unless the context requires otherwise, references to Energy Services include Energy Services, West Virginia Pipeline, SQP, Ryan Construction, Tri-State Paving and C.J. Hughes and its subsidiaries. ​ Use of Estimates and Assumptions The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America (“U.S.GAAP”), requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and loss during the reporting period. Actual results could differ materially from those estimates. Cash and Cash Equivalents Energy Services considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Fair Value Measurements The “Fair Value Measurement” Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP and specifies disclosures about fair value measurements. Under the FASB’s authoritative guidance on fair value measurements, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The “Fair Value Measurement” Topic establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows: F-9 Table of Contents Level 1 — Quoted prices for identical assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. Level 2 — Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data. Level 2 also includes derivative contracts whose value is determined using a pricing model with observable market inputs or can be derived principally from or corroborated by observable market data. Level 3 — Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also includes observable inputs for nonbinding single dealer quotes not corroborated by observable market data. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The carrying amount for borrowings under the Company’s revolving credit facility approximates fair value because of the variable market interest rate charged to the Company for these borrowings. The fair value of the Company’s long term fixed-rate debt was estimated using a discounted cash flow analysis and a yield rate that was estimated based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities. The fair value of the aggregate principal amount of the Company’s fixed-rate debt of $ 15.0 million at September 30, 2022 was $ 14.5 million. The fair value of the aggregate principal amount of the Company’s fixed-rate debt of $ 10.0 million at September 30, 2021 was $ 9.9 million. All other current assets and liabilities are carried at net realizable value which approximates fair value because of their short duration to maturity. Accounts Receivable and Allowance for Doubtful Accounts The Company’s accounts receivable consists of amounts that have been billed to customers. Collateral is generally not required. A majority of the Company’s contracts have monthly billing terms and payment terms within 30 to 45 days after invoices have been issued. The Company attempts to negotiate two-week billing terms and 15-day payment terms on larger projects. The timing of billings to customers may generate contract assets or contract liabilities. Certain construction contracts include retention provisions to provide assurance to our customers that we will perform in accordance with the contract terms and are therefore not considered a financing benefit. The balances billed but not paid by customers pursuant to these provisions generally become due upon completion and acceptance of the project work or products by the customer. We have determined there are no significant financing components in our contracts as of and for the years ended September 30, 2022 and 2021. Retainage billed but not paid pursuant to contract provisions will be due upon completion of the contracts. Based on the Company’s experience, management considers all amounts classified as retainage receivable to be collectible. All retainage receivable amounts are expected to be collected within the next fiscal year. The Company provides an allowance for doubtful accounts when collection of an account or note receivable is considered doubtful, and receivables are written off against the allowance when deemed uncollectible. Inherent in the assessment of the allowance for doubtful accounts are certain judgments and estimates including, among others, the customer’s access to capital, the customer’s willingness or ability to pay, general economic conditions and the ongoing relationship with the customer. Property and Equipment Property and equipment are recorded at cost. Costs which extend the useful lives or increase the productivity of the assets are capitalized, while normal repairs and maintenance that do not extend the useful life or increase productivity of the asset are expensed as incurred. Property and equipment are depreciated principally on the straight-line method over the estimated useful lives of the assets: buildings 39 years ; operating equipment and vehicles 5 - 7 years ; and office equipment, furniture and fixtures 5 - 7 years . F-10 Table of Contents Intangible Assets 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 are 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. Impairment of Long-Lived Assets A long-lived asset shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset’s carrying amount to determine if a write-down to market value is required. Claims Claims are amounts in excess of the agreed contract price that a contractor seeks to collect from customers or others for customer-caused delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved as to both scope and price, or other causes of unanticipated additional costs. The Company records revenue on claims that management believes are probable. Revenue from a claim is recorded only to the extent that contract costs relating to the claim have been incurred. Self -Insurance The Company has its workers compensation, general liability and auto insurance through a captive insurance company. While the Company believes that this arrangement has been very beneficial in reducing and stabilizing insurance costs, the Company has to maintain a surety deposit to guarantee payments of premiums. The surety deposit had a balance of $ 1.8 million and $ 2.1 million as of September 30, 2022 and 2021, respectively, which is in “Prepaid expenses and other” on the Company’s Consolidated Balance Sheets. Should the captive experience severe losses over an extended period, it could increase the Company’s insurance expense or surety deposit required. Advertising All advertising costs are expensed as incurred. Total advertising expense was $ 17,000 and $ 55,000 for the years ended September 30, 2022 and 2021, respectively. Stock Compensation Plans The Company accounts for its equity-based compensation as prescribed by U.S. GAAP for share-based payments. The Company has adopted a fair value-based method of accounting for employee equity-based plans, whereby compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. As a result, compensation expense relating to stock compensation plans will be reflected in net income as part of “Selling and administrative expenses” on the Consolidated Statements of Income. Income Taxes The Company and all subsidiaries file a consolidated federal and various state income tax returns on a fiscal year basis. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations for years ending prior to September 30, 2019. The Company follows the liability method of accounting for income taxes in accordance with U.S. GAAP. Under this method, deferred tax assets and liabilities are recorded for future tax consequences of temporary differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that are expected to be in effect when the underlying assets or liabilities are recovered or settled. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that a deferred tax asset will not be realized. F-11 Table of Contents U.S. GAAP also prescribes a comprehensive model for how companies should recognize, measure, present and disclose in their financial statements uncertain tax positions taken or to be taken on a tax return. This evaluation is a two-step process. First, the recognition process determines if it is more likely than not that a tax position will be sustained based on the merits of the tax position upon examination by the appropriate taxing authority. Second, a measurement process is calculated to determine the amount of benefit/expense to recognize in the financial statements if a tax position meets the more likely than not recognition threshold. The tax position is measured at the greatest amount of benefit/expense that is more likely than not of being realized upon ultimate settlement. Any interest and penalty related to the unrecognized tax benefits, as the result of recognition of tax obligations resulting from uncertain tax positions, are included in the provision for income taxes. The Company had not recognized any uncertain tax positions at September 30, 2022 or 2021. Earnings Per Common Share Basic earnings per share is computed using the weighted average number of common shares outstanding during the year, and diluted earnings per share is computed using the weighted average number of common shares outstanding during the year adjusted for all potentially dilutive common stock equivalents, except in cases where the effect of the common stock equivalent would be anti-dilutive. Collective Bargaining Agreements Certain Energy Services subsidiaries are party to collective bargaining agreements with unions representing members that are employed by the Company. The agreements require such subsidiaries to pay specified wages and provide certain benefits to the union employees. These agreements expire at various times and have typically been renegotiated and renewed on terms that are similar to the ones contained in the expiring agreements. Under certain collective bargaining agreements, the applicable Energy Services subsidiary is required to make contributions to multi-employer pension plans. If the subsidiary were to cease participation in one or more of these plans, a liability could potentially be assessed related to any underfunding of these plans. The amount of such assessment, were one to be made, cannot be reasonably estimated. Litigation Costs The Company recognizes reserves when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Litigation costs are expensed as incurred. New Accounting Pronouncements On October 28, 2021, the 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. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2022. For all other entities they are effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. Entities should apply the amendments prospectively to business combinations that occur after the effective date. Early adoption is permitted, including in any interim period, for public business entities for periods for which financial statements have not yet been issued, and for all other entities for periods for which financial statements have not yet been made available for issuance. The Company is currently assessing the effect that ASU 2021-08 will have on their results of operations, financial position and cash flows; however, the Company does not expect a significant impact. F-12 Table of Contents 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. 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. Retrospective application of the guidance is permitted. The guidance in ASU 2021-10 is effective for financial statements of all entities for annual periods beginning after December 15, 2021, with early application permitted. ASU 2021-10 has not become effective for the Company; however, a significant impact is not expected. Subsequent Events On October 10, 2022, the Company entered into a $ 3.1 million promissory note agreement with United Bank to finance the Ryan Environmental acquisition. This is a five-year agreement with a fixed interest rate of 6.0 % and monthly payments of $ 59,932 beginning on November 10, 2022. 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. 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. The Company’s attorney’s fees have been expensed as incurred. On December 16, 2022, the Defendant filed a notice of appeal with the court. Management has evaluated all subsequent events for accounting and disclosure. 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. ​ ​ 3. REVENUE RECOGNITION Our revenue is primarily derived from construction contracts that can span several quarters. We recognize revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606” or “Topic 606”) which provides for a five-step model for recognizing revenue from contracts with customers as follows: 1. Identify the contract 2. Identify performance obligations 3. Determine the transaction price 4. Allocate the transaction price 5. Recognize revenue The accuracy of our revenue and profit recognition in a given period depends on the accuracy of our estimates of the cost to complete each project. We believe our experience allows us to create materially reliable estimates. There are a number of factors that can contribute to changes in estimates of contract cost and profitability. 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. F-13 Table of Contents 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. 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. With the exception of customer affirmative claims, generally, such unbilled amounts will become billable according to the contract terms and generally will be billed and collected over the next three months. Settlement with the customer of outstanding affirmative claims is dependent on the claims resolution process and could extend beyond one year. Based on our historical experience, we generally consider the collection risk related to billable amounts to be low. When events or conditions indicate that it is probable that the amounts outstanding become unbillable, the transaction price and associated contract asset is reduced. Our contract liabilities consist of provisions for losses and billings in excess of costs and estimated earnings. Provisions for losses, if incurred, are recognized in the consolidated statements of income at the uncompleted performance obligation level for the amount of total estimated losses in the period that evidence indicates that the estimated total cost of a performance obligation exceeds its estimated total revenue. Billings in excess of costs and estimated earnings are billings to customers on contracts in advance of work performed, including advance payments negotiated as a contract condition. Generally, unearned project-related costs will be earned over the next twelve months. ​ 4. DISAGGREGATION OF REVENUE The Company disaggregates revenue based on the following lines of service: (1) Gas & Water Distribution, (2) Gas & Petroleum Transmission, and (3) Electrical, Mechanical, & General services and construction. Certain reclassifications have been made to the year ended September 30, 2021, to reflect the current presentation. Our contract types are: Lump Sum, Unit Price, Cost Plus and T&M. The following tables present our disaggregated revenue for the fiscal years ended September 30, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ Electrical, ​ ​ ​ ​ Gas & Water Gas & Petroleum Mechanical, Total revenue ​ ​ Distribution ​ Transmission ​ and General ​ from contracts Lump sum contracts ​ $ — ​ $ — ​ $ 49,451,175 ​ $ 49,451,175 Unit price contracts ​ 53,311,569 ​ 55,637,622 ​ 525,092 ​ 109,474,283 Cost plus and T&M contracts ​ — ​ 2,630,879 ​ 36,033,663 ​ 38,664,542 Total revenue from contracts ​ $ 53,311,569 ​ $ 58,268,501 ​ $ 86,009,930 ​ $ 197,590,000 ​ ​ ​ ​ ​ Earned over time ​ $ 34,493,112 ​ $ 54,551,248 ​ $ 83,557,477 ​ $ 172,601,837 Earned at point in time ​ 18,818,457 ​ 3,717,253 ​ 2,452,453 ​ 24,988,163 Total revenue from contracts ​ $ 53,311,569 ​ $ 58,268,501 ​ $ 86,009,930 ​ $ 197,590,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, 2021 ​ ​ ​ ​ ​ ​ ​ ​ Electrical, ​ ​ ​ ​ ​ Gas & Water ​ Gas & Petroleum ​ Mechanical, ​ Total revenue ​ Distribution Transmission and General from contracts Lump sum contracts ​ $ — ​ $ — ​ $ 37,691,770 ​ $ 37,691,770 Unit price contracts ​ 40,440,195 ​ 20,928,518 ​ — ​ 61,368,713 Cost plus and T&M contracts ​ — ​ 1,204,965 ​ 22,200,378 ​ 23,405,343 Total revenue from contracts ​ $ 40,440,195 ​ $ 22,133,483 ​ $ 59,892,148 ​ $ 122,465,826 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Earned over time ​ $ 26,244,396 ​ $ 20,928,518 ​ $ 58,796,767 ​ $ 105,969,681 Earned at point in time ​ 14,195,799 ​ 1,204,965 ​ 1,095,381 ​ 16,496,145 Total revenue from contracts ​ $ 40,440,195 ​ $ 22,133,483 ​ $ 59,892,148 ​ $ 122,465,826 ​ ​ F-14 Table of Contents 5. CONTRACT BALANCES The Company’s accounts receivable consists of amounts that have been billed to customers and collateral is generally not required. Most of the Company’s contracts have monthly billing terms; however, billing terms for some are based on project completion. Payment terms are generally within 30 to 45 days after invoices have been issued. The Company attempts to negotiate two-week billing terms and 15-day payment terms on larger projects. The timing of billings to customers may generate contract assets or contract liabilities. During the twelve months ended September 30, 2022, we recognized revenue of $ 3.0 million that was included in the contract liability balance at September 30, 2021. Accounts receivable-trade, net of allowance for doubtful accounts, contract assets and contract liabilities consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2021 September 30, 2022 Change ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable-trade, net of allowance for doubtful accounts ​ $ 21,022,207 ​ $ 38,454,913 ​ $ 17,432,706 ​ ​ ​ ​ ​ ​ Contract assets ​ ​ ​ ​ ​ Cost and estimated earnings in excess of billings ​ $ 8,730,402 ​ $ 16,109,593 ​ $ 7,379,191 ​ ​ ​ ​ ​ ​ Contract liabilities ​ ​ ​ ​ ​ Billings in excess of cost and estimated earnings ​ $ 3,153,290 ​ $ 6,027,578 ​ $ 2,874,288 ​ ​ 6. PERFORMANCE OBLIGATIONS For the year ended September 30, 2022, there was no revenue recognized as a result of changes in contract transaction price related to performance obligations that were satisfied prior to September 30, 2021. The changes in contract transaction price were from items such as executed or estimated change orders, and unresolved contract modifications and claims. For the year ended September 30, 2021, we recognized revenue of $ 430,000 as a result of changes in contract transaction price related to performance obligations that were satisfied prior to September 30, 2020. The changes in contract transaction price may be for items such as executed or estimated change orders, and unresolved contract modifications and claims. At September 30, 2022, the Company had $ 69.5 million in remaining unsatisfied performance obligations, in which revenue is expected to be recognized in less than twelve months. 7. ALLOWANCE FOR DOUBTFUL ACCOUNTS Activity in the Company’s allowance for doubtful accounts consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ F-15 Table of Contents 8. UNCOMPLETED CONTRACTS Costs and estimated earnings in excess of billings on uncompleted contracts are included in contract assets on the Consolidated Balance Sheets. Billings in excess of costs and estimated earnings on uncompleted contracts are included in contract liabilities on the Consolidated Balance Sheets. Costs, estimated earnings, and billings on uncompleted contracts are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ September 30, ​ 2022 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 ​ The Company’s unaudited backlog at September 30, 2022, and September 30, 2021, was $ 142.3 million and $ 72.2 million, respectively. ​ ​ 9. CLAIMS The Company does not have any claims receivable as of September 30, 2022 and 2021. Claims receivable is a component of contract assets. 10. PROVISION FOR LOSS The Company has one project with a $248,000 provision for loss at September 30, 2022. The provision is recorded as cost of revenues on the Company’s 2022 consolidated statements of income and accrued expenses and other current liabilities on the Company’s consolidated balance sheet at September 30, 2022. 11. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Land ​ $ 2,942,190 ​ $ 2,748,532 Buildings and leasehold improvements ​ 9,291,898 ​ 8,194,827 Operating equipment and vehicles ​ 60,245,329 ​ 48,941,730 Office equipment, furniture and fixtures ​ 1,046,172 ​ 948,297 Assets not yet in service ​ 210,844 ​ 312,319 ​ ​ 73,736,433 ​ 61,145,705 Less accumulated depreciation ​ 41,074,646 ​ 38,195,686 Property, plant and equipment, net ​ $ 32,661,787 ​ $ 22,950,019 ​ ​ F-16 Table of Contents 12. SHORT-TERM DEBT Short-term debt consists of the following: On July 13, 2022, the Company received a one-year extension on its operating line of credit effective June 28, 2022. The $ 15.0 million revolving line of credit has a $ 12.5 million component and a $ 2.5 million component. The Company can borrow from the $ 12.5 million component first and then from the additional $ 2.5 million component if additional requirements are met. The covenant requirement for both components are below. Based on the borrowing base calculation, the Company borrowed all $ 12.5 million available on the line of credit as of September 30, 2022. The Company did not meet the requirements to borrow any from the $ 2.5 million component. The interest rate on the line of credit is the “ Wall Street Journal ” Prime Rate (the index) with a floor of 4.99 %. The interest rate at September 30, 2022, was 5.5 %. Based on the borrowing base calculation, the Company was able to borrow up to $ 12.2 million as of September 30, 2021. The Company had $ 4.5 million in borrowings on the line of credit, leaving $ 7.7 million available on the line of credit as of September 30, 2021. The interest rate at September 30, 2021, was 4.99 %. Under the terms of the agreement, the Company must meet the following loan covenants to access the first $ 12.5 million: 1. Minimum tangible net worth of $ 21.5 million to be measured quarterly, 2. Minimum traditional debt service coverage of 1.25x to be measured quarterly on a rolling twelve- month basis, 3. Minimum current ratio of 1.50x to be measured quarterly, 4. Maximum debt to tangible net worth ratio (“TNW”) of 1.5x to be measured semi-annually, 5. Full review of accounts receivable aging report and work in progress. The results of the review shall be satisfactory to the lender in its sole and unfettered discretion. Under the terms of the agreement, the Company must meet the following additional requirements for draw requests causing the borrowings to exceed $ 12.5 million: 1. Minimum traditional debt service coverage of 2.0x to be measured quarterly on a rolling twelve-month basis, 2. Minimum tangible net worth of $ 24.0 million to be measured quarterly. The Company was not in compliance with all covenants but received a waiver on the $ 12.5 million component of the line of credit at September 30, 2022. The Company projects to be in compliance with all covenants associated with the $ 12.5 million component for the next twelve months. 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. In January 2022 and 2021, respectively, the Company financed $ 3.4 million and $ 3.2 million in insurance premiums. At September 30, 2022 and 2021, respectively, the remaining balance of the insurance premiums was $ 580,000 and $ 540,000 . F-17 Table of Contents 13. SHORT-TERM AND LONG-TERM DEBT A summary of short-term and long-term debt as of September 30, 2022 and 2021 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Line of credit payable to bank, variable interest rate of 5.50 % at September 30, 2022, final payment due by June 28, 2023, guaranteed by certain directors of the Company. See also Note 5. ​ $ 12,500,000 ​ $ 4,500,000 ​ ​ ​ ​ ​ Term note payable to United Bank, WV Pipeline acquisition, due in monthly installments of $ 64,853 , fixed interest at 4.25 %, final payment due by March 25, 2026, secured by receivables and equipment, guaranteed by certain directors of the Company. ​ ​ 2,529,421 ​ ​ 3,183,549 ​ ​ ​ ​ ​ ​ ​ Notes payable to finance companies, due in monthly installments totaling $ 59,500 at September 30, 2022 and $ 70,062 at September 30, 2021, including interest ranging from 0.00 % to 5.50 %, final payments due October 2022 through August 2026, secured by equipment. ​ 889,165 ​ 1,066,580 ​ ​ ​ ​ ​ Note payable to finance company for insurance premiums financed, due in monthly installments totaling $ 282,297 in FY 2022 and $ 272,000 in FY 2021, including interest rate at 3.27 %, final payment December 2022. ​ 580,320 ​ 540,250 ​ ​ ​ ​ ​ Notes payable to bank, due in monthly installments totaling $ 7,848 , including interest at 4.82 %, final payment due November 2034 secured by building and property. ​ 867,383 ​ 919,017 ​ ​ ​ ​ ​ Notes payable to bank, due in monthly installments totaling $ 12,193 , variable interest of 7.25 % at September 30, 2022, final payment due November 2025 secured by building and property, guaranteed by certain directors of the Company. ​ 412,917 ​ 530,750 ​ ​ ​ ​ ​ Notes payable to bank, due in monthly installments totaling $ 98,865 , including interest at 4.99 %, final payment due June 2022 secured by equipment, guaranteed by certain directors of the Company. ​ — ​ 872,452 ​ ​ ​ Notes payable to David Bolton and Daniel Bolton, due in annual installments totaling $ 500,000 , including interest at 3.25 %, final payment due December 31, 2026, unsecured ​ 2,380,000 ​ 2,850,000 ​ ​ ​ ​ ​ Notes payable to bank, fixed interest at 4.25 % of outstanding balance due in monthly installments between January 2021 and January 2022. Note payments due in monthly installments totaling $ 68,150 , including variable interest rate of 7.25 % at September 30, 2022, with final payment due September 2026, secured by equipment, guaranteed by certain directors of the Company. ​ 2,549,281 ​ 3,000,000 ​ ​ ​ ​ ​ Term note payable to United Bank, Tri-State Paving acquisition, due in monthly installments of $ 129,910 , fixed interest at 4.25 %, final payment due by June 1, 2027, secured by receivables and equipment, guaranteed by certain directors of the Company. ​ ​ 6,982,097 ​ ​ — ​ ​ ​ ​ ​ ​ ​ Notes payable to Corns Enterprises, due in annual installments totaling $ 250,000 , including interest at 3.50 %, final payment due April 29, 2026, unsecured ​ ​ 943,836 ​ ​ — ​ ​ ​ ​ ​ ​ ​ Total debt ​ $ 30,634,420 ​ $ 17,462,598 ​ ​ ​ ​ ​ Less current maturities ​ 17,140,336 ​ 8,441,824 ​ ​ ​ ​ ​ Total long term debt ​ $ 13,494,084 ​ $ 9,020,774 ​ At September 30, 2022, future expected payments due on short-term and long-term debt are as follows: ​ ​ ​ ​ ​ 2023 $ 17,140,336 2024 ​ 4,061,665 2025 ​ 4,170,114 2026 ​ 3,569,091 2027 ​ 1,069,272 Thereafter ​ 623,942 ​ ​ $ 30,634,420 ​ ​ F-18 Table of Contents 14. INCOME TAXES The components of income taxes are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Federal ​ ​ ​ ​ ​ ​ Current ​ $ 78,000 ​ $ ( 187,829 ) Deferred ​ 1,686,864 ​ 165,108 Total ​ 1,764,864 ​ ( 22,721 ) ​ ​ ​ ​ ​ State ​ ​ ​ ​ Current ​ 22,000 ​ ( 52,977 ) Deferred ​ 475,782 ​ 46,569 Total ​ 497,782 ​ ( 6,408 ) ​ ​ ​ ​ ​ Total income tax expense (benefit) ​ $ 2,262,646 ​ $ ( 29,129 ) ​ The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best estimate of current and future taxes to be paid. Significant judgments and estimates are required in the determination of the consolidated income tax expense. The Company’s provision for income taxes is computed by applying a federal rate of 21.0 % and a state rate of 6.0 % to taxable income or loss after consideration of non-taxable and non-deductible items. The income tax expense for fiscal year ended September 30, 2022 was $ 2.3 million and was due to an increase in taxable income. The income tax benefit for fiscal year ended September 30, 2021, was ($ 29,000 ). According to the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) passed by Congress in March 2020, PPP loan forgiveness is not taxable. In accordance with the Consolidated Appropriations Act, 2021, the Company’s PPP related expenditures in fiscal year 2020 were considered deductible expenses for federal income tax purposes. The effective income tax rate for fiscal year ended September 30, 2022 was 37.0 %. The effective income tax rate for fiscal year ended September 30, 2021, was ( 0.32 %). The PPP forgiveness had a significant impact on the effective income tax rate for fiscal year ended September 30, 2021, as taxable income was decreased by $ 9.8 million. 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, ​ 2022 2021 ​ ​ ​ ​ ​ ​ Statutory rate 21.0 % 21.0 % State income taxes 6.0 % 6.0 % Non-deductible meals and other 10.0 % 5.7 % Credit from solar installation project ​ — % ( 2.8 ) % PPP loan forgiveness — % ( 30.2 ) % Effective tax rate 37.0 % ( 0.3 ) % ​ Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, which will result in taxable or deductible amounts in the future. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. At September 30, 2022, the Company expects all net operating loss carryforwards to be realized in the near future. F-19 Table of Contents The income tax effects of temporary differences giving rise to the deferred tax assets and liabilities are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended September 30, ​ 2022 2021 Deferred tax liabilities ​ ​ ​ ​ ​ ​ Property and equipment ​ $ 7,686,064 ​ $ 4,883,398 Other ​ ​ 7,632 ​ ​ 37,582 Total deferred tax liabilities ​ $ 7,693,696 ​ $ 4,920,980 ​ ​ ​ ​ ​ ​ ​ Deferred income tax assets ​ ​ Other ​ $ 404,093 ​ $ 358,400 Net operating loss carryforward ​ ​ 2,834,524 ​ ​ 2,529,147 Total deferred tax assets ​ $ 3,238,617 ​ $ 2,887,547 ​ ​ ​ ​ ​ ​ ​ Total net deferred tax liabilities ​ $ 4,455,079 ​ $ 2,033,433 ​ The Company does not believe that it has any unrecognized tax benefits included in its consolidated financial statements that require recognition. The Company has not had any settlements in the current period with taxing authorities, nor has it recognized tax benefits as a result of a lapse of the applicable statute of limitations. The Company recognizes interest and penalties accrued related to unrecognized tax benefits, if applicable, in general and administrative expenses. 15. EARNINGS PER SHARE Earnings per share for the years ended September 30, 2022, and 2021 are as follow: ​ ​ ​ ​ ​ ​ ​ ​ ​ Twelve Months Ended Twelve Months Ended ​ ​ September 30, ​ September 30, ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 3,850,073 ​ $ 9,097,255 ​ ​ ​ ​ ​ Dividends on preferred stock ​ — ​ 284,238 ​ ​ ​ ​ ​ Income available to common shareholders ​ $ 3,850,073 ​ $ 8,813,017 ​ ​ ​ ​ ​ Weighted average shares outstanding-basic ​ 16,323,790 ​ 13,621,406 ​ ​ ​ ​ ​ Weighted average shares outstanding-diluted ​ 16,323,790 ​ 16,988,424 ​ ​ ​ ​ ​ Earnings per share available to common shareholders ​ $ 0.24 ​ $ 0.65 ​ ​ ​ ​ ​ Earnings per share available to common shareholders-diluted ​ $ 0.24 ​ $ 0.52 ​ ​ 16. STOCK PURCHASE PLAN At the annual meeting of the shareholders on November 19, 2008, the shareholders approved the establishment of an employee stock purchase plan. The stock purchase plan authorizes the issuance of up to 1,200,000 shares of common stock for purchase by eligible employees. A participant’s stock purchased during a calendar year may not exceed the lesser of (a) a percentage of the participant’s compensation or a total amount as specified by the compensation committee of the Board, or (b) $ 25,000 . The stock will be offered at a purchase price of at least 85 % of its fair market value on the date of purchase. The major plan provisions cover the purposes of the plan, effective date and duration, administration, eligibility, stock type, stock purchase limitations, price of stock, participation election, payroll deductions, payment for stock, date of purchase, termination of agreement, termination of employment, recapitalization, change of control, assignability, Stockholder rights, compliance with Internal Revenue Code Section 423, amendment and termination, application of funds, tax withholdings, governing laws, employment at will and arbitration. There have been no agreements with any employees made under this plan as of the year ended September 30, 2022. F-20 Table of Contents On July 6, 2022, the Company’s Board of Directors authorized a 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 not to exceed 1,000,000 shares, which is approximately 6.0 % of its outstanding common stock. 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. To date, no repurchases have been made in connection with the Program. 17. LONG TERM INCENTIVE PLAN 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. 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. 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. To date, no grants of stock-based awards have been made. ​ 18. RELATED PARTY TRANSACTIONS The Company intends that all transactions between it and our executive officers, directors, holders of 10% or more of the shares of any class of our common stock and affiliates thereof, will be on terms no less favorable than those terms given to unaffiliated third parties and will be approved by a majority of our independent outside directors not having any interest in the transaction. 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 . As of September 30, 2022, the Company had paid approximately $ 333,000 in principal and approximately $ 370,000 in interest since the beginning of the loan. 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. Marshall Reynolds, Chairman of the Board of Energy Services, held the same position with Premier Financial Bancorp, Inc. Mr. 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. Douglas Reynolds was elected a director of Peoples Bancorp, Inc., and its subsidiary Peoples Bank. 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. 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. Subsequent to the April 29, 2022, acquisition of Tri-State Paving, the Company entered into a 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. The total net present value at inception was $ 236,000 with a carrying value of $ 205,000 at September 30, 2022. SQP made an equity investment of $ 156,000 in 1030 Quarrier Development, LLC (“Development”) in August 2022. 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. 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”): An old 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. 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. F-21 Table of Contents Other than mentioned above, there were no new material related party transactions entered into during the fiscal year ended September 30, 2022. 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. All revenue and related expense transactions, as well as the related accounts payable and accounts receivable have been eliminated in consolidation. 19. LEASE OBLIGATIONS 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. Rental terms for the option periods shall be negotiated and agreed mutually between the parties and shall not exceed five percent increases to rent, if any. The lease is expensed monthly and not treated as a right-to-use asset as it does not have a material impact on the Company’s consolidated financial statements. During the twelve months ended September 30, 2022, the Company entered into two lease agreements of 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 the right to purchase the equipment at the expiration of the leases by applying the two-month deposit paid. The right-of-use assets and finance lease obligations associated with these lease agreements are included in the consolidated balance sheets within property, plant and equipment and long-term debt, respectively, and do not have a material impact on the Company’s consolidated financial statements. The Company has two right-of-use operating leases acquired on April 29, 2022, as part of the Tri-State Paving, LLC transaction. The first operating lease, for the Hurricane, WV facility, had a net present value of $ 236,000 at April 29, 2022, and a carrying value of $ 205,000 at September 30, 2022. The second operating lease, for the Chattanooga, Tennessee facility, had a net present value of $ 144,000 at April 29, 2022, and a carrying value of $ 119,000 at September 30, 2022. The 4.5 % interest rate on the operating leases is based on the Company’s incremental borrowing rate at inception. The Company has a right-of-use operating lease with Enterprise Fleet Management, Inc. acquired on August 11, 2022, as part of the Ryan Environmental acquisition. This lease agreement was initially for 31 vehicles to be used for Ryan Construction; however, the Company plans to add vehicles as it finds necessary. This lease had a net present value of $ 1.2 million at inception, which approximates the carrying value 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 Company has a right-of-use operating lease with RICA Developers, LLC acquired on August 12, 2022, as part of the Ryan Environmental acquisition. 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. Schedules related to the Company’s operating leases at fiscal year ended September 30, 2022 can be found below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Lease-Weighted Average Remaining Term ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years left Remaining liability Lease end Fiscal year end Operating lease 1 ​ 2.6 ​ $ 205,267 4/30/2025 2025 Operating lease 2 ​ 1.8 ​ 119,032 5/31/2024 2024 Operating lease 3 ​ 3.9 ​ 1,166,498 8/10/2026 2027 Operating lease 4 ​ 1.0 ​ 113,480 8/11/2023 2023 ​ ​ ​ ​ ​ $ 1,604,277 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average remaining term ​ ​ ​ 3.4 years ​ F-22 Table of Contents ​ ​ ​ ​ Operating Lease Maturity Schedule ​ 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 ​ ​ ​ ​ ​ ​ Year ended ​ ​ September 30, Operating Lease Expense 2022 ​ ​ ​ ​ Amortization ​ ​ ​ Operating lease 1 ​ $ 30,933 Operating lease 2 ​ 25,554 Operating lease 3 ​ 22,672 Operating lease 4 ​ 19,552 Total amortization ​ 98,711 ​ ​ ​ ​ Interest ​ Operating lease 1 ​ 4,067 Operating lease 2 ​ 2,411 Operating lease 3 ​ 4,360 Operating lease 4 ​ 964 Total interest ​ 11,802 Total amortization and interest ​ $ 110,513 ​ ​ ​ ​ ​ ​ Year ended ​ ​ September 30, Cash Paid for Operating Leases ​ 2022 ​ ​ ​ ​ Operating lease 1 ​ $ 35,000 Operating lease 2 ​ 27,965 Operating lease 3 ​ 27,032 Operating lease 4 ​ 27,561 ​ ​ $ 117,558 ​ The Company rents equipment for use on construction projects with rental agreements being week to week or month to month. Rental expense can vary by fiscal year due to equipment requirements on construction projects and the availability of Company owned equipment. Rental expense, which is included in cost of goods sold on the consolidated statements of income, was $ 9.8 million and $ 3.6 million for the years ended September 30, 2022, and 2021, respectively. ​ F-23 Table of Contents 20. MAJOR CUSTOMERS The tables below present 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, 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. The loss of a major customer could have a severe impact on the profitability of operations 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. ​ 21. RETIREMENT AND EMPLOYEE BENEFIT PLANS In 2022 and 2021, C. J. Hughes maintained a tax-qualified 401(k) retirement plan for union employees. Employees can contribute up to 15 % of eligible wages, provided the compensation deferred for a plan year does not exceed the indexed dollar amount set by the Internal Revenue Service which was $ 20,500 for 2022 and 2021. C. J. Hughes matches $ 0.25 on each dollar contributed up to 6 % of eligible wages. C. J. Hughes contributed $ 22,000 and $ 26,000 to the union plan for fiscal years September 30, 2022 and 2021, respectively. Additionally, each plan year, C. J. Hughes may make a discretionary profit-sharing contribution for participants who are actively employed on the last day of the plan year. No discretionary profit-sharing contribution was made for the 2022 or 2021 plan year. Effective January 1, 2010, Energy Services became the successor plan sponsor of the C. J. Hughes Construction Company, Inc. 401(k) Plan for non-union employees (the “Plan”). The Plan was renamed the Energy Services of America Staff 401(k) Retirement Savings Plan. Employees are eligible to participate in the Plan upon completion of six months of service but must wait until a quarterly entry to join the Plan. In addition, participants who are age 50 or older by the end of the Plan year may elect to defer up to an additional $6,500 into the 401(k) Plan for 2022. Energy Services may make annual discretionary matching contributions and/or profit-sharing contributions to the Plan. The matching contribution formula for the Plan was 100 % of each dollar contributed for the first 3% of eligible wages and 50 % of each dollar contributed for the next 3% of eligible wages. The Company’s matching contribution is used by the Plan’s third-party administrator to purchase Energy Services of America common stock from the open market. No restrictions on the match exist after it has been contributed. No profit-sharing contribution was made for the 2022 or 2021 plan year. Energy Services and its wholly owned subsidiaries contributed $ 402,000 and $ 365,000 , respectively, for the fiscal years ended September 30, 2022, and 2021 to the Plan. In addition, during fiscal year 2021, a one-time $ 651,000 Qualified Non-Elective Contribution (“QNEC”) was made to the Plan attributable to the 2021 Plan year to adjust Plan participant’s balances due to a third-party administrator’s actions. F-24 Table of Contents The Company contributes to a number of multi-employers defined benefit pension plans under the terms of collective-bargaining agreements that cover its union-represented employees. The risks of participating in these multi-employer plans are different from single-employer plans in the following aspects: ● Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers. If participating employers stop contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. ● If the Company chooses to stop participating in some of its multi-employer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. The following table presents our participation in these plans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contributions of ​ ​ ​ ​ ​ ​ ​ ​ Pension Protection Act ("PPA") ​ ​ ​ Energy Services ​ ​ ​ ​ ​ ​ ​ ​ Certified Zone Status (1) ​ FIP/RP Status ​ Companies ​ ​ ​ Expiration Date of ​ ​ EIN/Pension ​ ​ ​ ​ ​ Pending/ ​ ​ ​ ​ ​ ​ ​ Surcharge ​ Collective Bargaining Pension Fund Plan Number 2021 2020 Implemented (2) 2022 2021 Imposed Agreement ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Central States, Southeast and Southwest Areas Pension Fund ​ 36-6044243/001 Red Red Implemented $ 123,142 $ — no Various ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Employer-Teamsters Local Nos. 175 and 505 55-6021850/001 Red Red Implemented ​ — ​ — ​ no Various ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Laborers National Pension Fund ​ 75-1280827/001 ​ Red ​ Red ​ Implemented ​ ​ 384,908 ​ ​ 394,563 ​ no ​ Various ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Laborers' District Council of Western Pennsylvania Pension Plan ​ 25-6135576/001 ​ Yellow ​ Yellow ​ Implemented ​ ​ 269,915 ​ ​ — ​ no ​ Various ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Engineers Local 324 Pension Fund 38-1900637/001 Red Red Implemented ​ 66,757 ​ — ​ no Various ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ National Automatic Sprinkler Industry Pension Fund 52-6054620/001 Red Red Implemented ​ 199,984 ​ 121,133 ​ no Various ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Iron Workers District Council of Southern Ohio &Vicinity Pension Trust 31-6038516/001 Yellow Yellow Implemented ​ 208,588 ​ 160,367 ​ no Various ​ ​ ​ ​ Carpenters Pension Fund of WV 55-6027998/001 Red Red Implemented ​ 719,665 ​ 281,568 ​ no Various ​ ​ ​ ​ ​ ​ ​ ​ Plumbers & Pipefitters National Pension Fund 52-6152779/001 Yellow Yellow Implemented ​ 660,324 ​ 616,568 ​ no Various ​ ​ ​ ​ ​ ​ ​ ​ Sheet Metal Workers' National Pension Fund 52-6112463/001 Yellow Yellow Implemented ​ 175,643 ​ 538,286 ​ no Various ​ ​ ​ ​ ​ ​ ​ ​ Sheet Metal Workers Local Pension Fund ​ 34-6666753/001 ​ Red ​ Red ​ Implemented ​ ​ — ​ ​ — ​ no ​ Various ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Plumbers and Pipefitters Local 152 Pension Fund 55-6029095/001 Red Red Implemented ​ — ​ 2,492 ​ no Various ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ All Other Green Green ​ 3,611,624 ​ 2,783,713 ​ no Various ​ ​ ​ ​ ​ ​ ​ ​ $ 6,420,550 ​ $ 4,898,691 ​ (1) The most recent PPA zone status available in 2022 and 2021 is the plan’s year-end during 2021 and 2020, respectively. The zone status is based on information that we received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the orange zone are less than 80 percent funded and have an Accumulated Funding Deficiency in the current year or projected into the next six years, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. (2) Indicates whether the plan has a financial improvement plan (“FIP”) or a rehabilitation plan (“RP”) which is either pending or has been implemented. The Company currently does not have intentions of withdrawing from any of the multi-employer pension plans in which it participates. 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. The Company has not performed covered work in their jurisdiction since 2011; however, the Company disagrees with the withdrawal claim and believes it is covered by an exemption under federal law. The demand called for thirty-four quarterly installment payments of $ 41,000 starting December 15, 2021. The Company must comply with the demand under federal pension law; however, the Company firmly believes no withdrawal liability exists. The Company is in negotiations with the pension fund to resolve the matter and all future payments have been suspended as part of the negotiation. 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. F-25 Table of Contents ​ 22. CREDIT RISK Financial instruments which potentially subject the Company to credit risk consist primarily of cash, cash equivalents and contract receivables. The Company places its cash with high quality financial institutions. At times, the balances in such institutions may exceed the FDIC insurance limit of $250,000 per depositor, per insured bank, for each account ownership category. FDIC insurance covers all deposit accounts, including checking accounts, savings accounts, money market deposit accounts, and certificates of deposit. As of September 30, 2022, the Company had $ 4.9 million of uninsured deposits. The Company performs periodic credit evaluations of its customer’s financial condition and generally does not require collateral. Consequently, the Company is subject to potential credit risk related to business and economic factors that would affect these companies. However, the Company generally has certain statutory lien rights with respect to services provided. Credit losses consistently have been within management’s expectations. ​ 23. COMMITMENTS AND CONTINGENCIES During the normal course of operations, the Company is subject to certain subcontractor claims, mechanic’s liens, and other litigation. Management is of the opinion that no material obligations will arise from any pending legal proceedings. Accordingly, no provision has been made in the financial statements for such litigation. 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. 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. In February 2014, the Company entered into an agreement with a surety company to provide bonding which will suit the Company’s immediate needs. The ability to obtain bonding for future contracts is an important factor in the contracting industry with respect to the type and value of contracts that can be bid. Depending upon the size and conditions of a particular contract, the Company may be required to post letters of credit or other collateral in favor of the insurer. Posting of these letters or other collateral will reduce our borrowing capabilities. The Company does not anticipate any claims in the foreseeable future. At September 30, 2022, the Company had $ 82.8 million in performance bonds outstanding. 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. 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 that time. However, no assurance can be given as to the outcome if the SBA re-evaluates the Company’s loan certification. 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. 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. ​ 24. ACQUISITIONS Energy Services accounts for business combinations under the acquisition method in accordance with ASC Topic 805 “Business Combinations”. Accordingly, for the transaction, the purchase price is allocated to the fair value of the assets acquired and liabilities assumed as of the date of the acquisition. In conjunction with ASC 805, upon receipt of final fair value estimates during the measurement period, which must be within one year of the acquisition date, Energy Services records any adjustments to the preliminary fair value estimates in the reporting period in which the adjustments are determined. F-26 Table of Contents On April 29, 2022, the Company completed the acquisition of Tri-State Paving LLC, located in Hurricane, West Virginia. Pursuant to the Asset Purchase Agreement (“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. The $ 7.5 million in cash was funded through a loan with United Bank and the transaction resulted in the issuance of 419,287 common shares. As part of the Agreement, the Company entered into a four-year , $ 1.0 million note that requires $ 250,000 principal installment payments on or before the end of each twelve (12) full calendar month period beginning on the date of the Note, 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. The non-cash purchase price, including $ 390,000 of debt assumed, for the Tri-State Paving acquisition is allocated in the table below: ​ ​ ​ ​ ​ Property and equipment $ 5,709,094 Goodwill ​ 2,273,237 Customer relationships ​ 1,649,159 Non-compete ​ 39,960 Tradename ​ ​ 203,213 Total ​ $ 9,874,663 ​ On August 11, 2022, Ryan Construction, a newly formed wholly owned subsidiary of Energy Services, completed the acquisition of 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 Transport, located in Bridgeport, West Virginia, under the terms of an Asset Purchase Agreement. 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. The purchase price for the Ryan Environmental and Ryan Transport acquisitions is allocated in the table below: ​ ​ ​ ​ ​ Property and equipment $ 3,237,559 Accounts receivable, net of $ 250,000 allowance ​ 677,254 Unbilled receivable ​ 127,244 Total ​ $ 4,042,057 ​ ASC 805-10-50-2 requires public companies that present comparative financial statements to present pro forma financial statements as though the business combination that occurred during the current fiscal year had occurred as of the beginning of the comparable prior annual reporting period. As allowed under ASC 805-10-50-2, the Company finds this information impracticable to provide for the periods presented due to the lack of availability of meaningful financial statements of the acquired companies that comply with U.S. GAAP. ​ 25. GOODWILL AND INTANGIBLE ASSETS ​ The Company follows the guidance of 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. 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 or 2021. F-27 Table of Contents A table of the Company’s goodwill is below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ September 30, ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ Beginning balance $ 1,814,317 $ — ​ ​ ​ ​ ​ ​ ​ Acquired ​ 2,273,237 ​ 1,814,317 ​ ​ ​ ​ ​ ​ ​ Ending balance ​ $ 4,087,554 ​ $ 1,814,317 ​ A table of the Company’s intangible assets subject to amortization at September 30, 2022, 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 ​ The amortization on identifiable intangible assets for fiscal years ended September 30, 2022 and 2021 was $445,000 and $231,000 , respectively. ​ Amortization expense associated with the identifiable intangible assets is expected to be as follows: ​ ​ ​ ​ ​ ​ Amortization Expense 2023 ​ $ 483,004 2024 ​ 438,122 2025 ​ 432,569 2026 ​ 432,569 2027 ​ 432,569 After ​ ​ 1,654,856 Total ​ $ 3,873,690 ​ ​ F-28 Table of Contents 26. SUBSEQUENT EVENTS ​ On October 10, 2022, the Company entered into a $ 3.1 million promissory note agreement with United Bank to finance the Ryan Environmental acquisition. This is a five-year agreement with a fixed interest rate of 6.0 % and monthly payments of $ 59,932 beginning on November 10, 2022. 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. 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. The Company’s attorney’s fees have been expensed as incurred. On December 16, 2022, the Defendant filed a notice of appeal with the court. Management has evaluated all subsequent events for accounting and disclosure. 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. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ F-29