What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-31 · 165 added, 126 removed, 471 unchanged (38% of the section changed)

33 unchanged sentences

Shareholders’ equity

Common stock, $ .0001 par value Authorized 50,000,000 shares, 17,885,615 issued and 16,635,004 outstanding at March 31, 2023 and 17,885,615 issued and 16,667,185 outstanding at September 30, 2022

Treasury stock, 1,250,611 shares at March 31, 2023 and 1,218,430 shares at September 30, 2022

Common stock, $ .0001 par value Authorized 50,000,000 shares, 17,885,615 issued and 16,567,185 outstanding at June 30, 2023 and 17,885,615 issued and 16,667,185 outstanding at September 30, 2022

Treasury stock, 1,318,430 shares at June 30, 2023 and 1,218,430 shares at September 30, 2022

Additional paid in capital

6 unchanged sentences

Energy Services of America Corporation

Consolidated Statements of Income (Loss)

Consolidated Statements of Income

Three Months Ended

Six Months Ended

Nine Months Ended

Cost of revenues

Selling and administrative expenses

(Loss) income from operations

( 1,987,094 )

( 1,316,970 )

Income from operations

Other income (expense)

5 unchanged sentences

( 1,830,118 )

(Loss) income before income taxes

( 2,523,760 )

( 2,464,998 )

Income tax (benefit) expense

Net (loss) income

( 1,873,600 )

( 1,735,226 )

Income before income taxes

Income tax expense

Weighted average shares outstanding-basic

Weighted average shares-diluted

(Loss) earnings per share-basic

(Loss) earnings per share-diluted

Earnings per share-basic

Earnings per share-diluted

The Accompanying Notes are an Integral Part of These Financial Statements

1 unchanged sentence

Consolidated Statements of Cash Flows

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

Net (loss) income

( 1,735,226 )

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Accreted interest on PPP Loans

4 unchanged sentences

Accreted interest on notes payable

Decrease in accounts receivable

Increase in accounts receivable

( 9,369,616 )

( 3,086,194 )

Increase in retainage receivable

2 unchanged sentences

(Increase) decrease in other receivables

Decrease in contract assets

Decrease (increase) in prepaid expenses and other

Decrease (increase) in contract assets

( 3,206,678 )

Decrease in accounts payable

Decrease in prepaid expenses and other

(Decrease) increase in accounts payable

( 1,480,418 )

(Decrease) increase in accrued expenses and other current liabilities

( 3,010,776 )

Increase in contract liabilities

15 unchanged sentences

( 4,884,880 )

( 2,803,888 )

Proceeds from long-term debt

4 unchanged sentences

( 9,420,243 )

Increase (decrease) in cash and cash equivalents

( 2,831,342 )

Increase in cash and cash equivalents

Cash and cash equivalents beginning of period

3 unchanged sentences

Prepaid insurance premiums financed

Debt assumed in acquisitions for equipment

Sellers’ note Tri-State Paving acquisition

Note payable to finance Tri-State Paving acquisition

Common stock issued to finance Tri-State Paving acquisition

Par value of common stock issued from preferred stock conversion

Operating lease right-of-use assets acquired in exchange for operating liabilities

Operating lease right-of-use assets acquired in exchange for operating lease liabilities

Supplemental disclosures of cash flows information:

3 unchanged sentences

Consolidated Statements of Changes in Shareholders’ Equity

For the three and six months ended March 31, 2023 and 2022

For the three and nine months ended June 30, 2023 and 2022

Additional Paid

11 unchanged sentences

( 34,838,059 )

Treasury stock purchased by company

Balance at June 30, 2023

( 31,422,513 )

Additional Paid

12 unchanged sentences

( 35,484,353 )

Net income, as restated

Shares issued for Tri-State Paving acquisition

Balance at June 30, 2022, as restated

( 33,887,110 )

The Accompanying Notes are an Integral Part of These Financial Statements

14 unchanged sentences

Nitro Construction Services, Inc.

(“Nitro”), a wholly owned subsidiary of C.J.

Hughes, provides electrical, mechanical, HVAC/R, solar installation, and fire protection services to customers primarily in the automotive, chemical, and power industries.

Revolt Energy, LLC and Nitro Electric Company, LLC are newly formed, wholly owned subsidiaries of Nitro.

(“NCS”), a wholly owned subsidiary of C.J.

Hughes, provides electrical, mechanical, HVAC/R, and fire protection services to customers primarily in the automotive, chemical, and power industries.

Revolt Energy, LLC (“Revolt”), a wholly owned subsidiary of NCS, performs residential solar installation projects.

Nitro Electric Company, LLC (“Nitro Electric”), a wholly owned subsidiary of NCS, performs industrial electrical work and is a satellite office registered in Michigan.

Pinnacle Technical Solutions, Inc.

(“Pinnacle”), a wholly owned subsidiary of Nitro, operates as a data storage facility within Nitro’s office building.

Pinnacle is supported by Nitro and has no employees of its own.

(“Pinnacle”), a wholly owned subsidiary of NCS, operates as a data storage facility within Nitro’s office building.

Pinnacle is supported by NCS and has no employees of its own.

NCS and its subsidiaries will collectively be referred to “Nitro”.

Hughes, Nitro, and Contractors Rental construction personnel are union members of various related construction trade unions and are subject to collective bargaining agreements that expire at varying time intervals.

21 unchanged sentences

The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s financial position and results of operations.

The operating results for the three and six months ended March 31, 2023 and 2022 are not necessarily indicative of the results to be expected for the full year or any other interim period.

The operating results for the three and nine months ended June 30, 2023 and 2022 are not necessarily indicative of the results to be expected for the full year or any other interim period.

Principles of Consolidation

11 unchanged sentences

1 to the Company’s Annual Report on Form 10-K/A for the year ended September 30, 2022 for a more detailed discussion of our significant accounting policies.

There were no material changes to these significant accounting policies during the three and six months ended March 31, 2023.

There were no material changes to these significant accounting policies during the three and nine months ended June 30, 2023.

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

15 unchanged sentences

The Company has recorded a short-term borrowing due to the SBA inquiry for the full $ 9.8 million, plus accrued interest for all periods presented.

Tables for the income statement impact “As previously reported” and “restated” for Payroll Protection Program loan forgiveness and interest expense for the three and six months ended March 31, 2022 are below:

Three Months Ended March 31, 2022

Six Months Ended March 31, 2022

During July 2023, management received notification from the SBA that two additional forgiveness applications related to the PPP Loans were under review.

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

The requested information was subsequently provided to the SBA through the Lender.

Tables for the income statement impact “As previously reported” and “restated” for Paycheck Protection Program loan forgiveness and interest expense for the three and nine months ended June 30, 2022 are below:

Three Months Ended June 30, 2022

As Previously

Interest expense

Nine Months Ended June 30, 2022

As Previously

Interest expense

A table for the balance sheet impact “As previously reported” and “restated” for Payroll Protection Program loan forgiveness and interest expense at September 30, 2022 is below:

A table for the balance sheet impact “As previously reported” and “restated” for Paycheck Protection Program loan forgiveness and interest expense at September 30, 2022 is below:

September 30, 2022

As Previously

Lines of credit and short-term borrowings

33 unchanged sentences

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 (loss) at the uncompleted performance obligation level for total estimated losses in the period that evidence indicates that the estimated total cost of a performance obligation exceeds its estimated total revenue.

Provisions for losses, if incurred, are recognized in the consolidated statements of income at the uncompleted performance obligation level for 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.

5 unchanged sentences

Lump Sum, Unit Price, Cost Plus and Time and Materials (“T&M”).

The following tables present our disaggregated revenue for the three and six months ended March 31, 2023 and 2022:

Three Months Ended March 31, 2023

The following tables present our disaggregated revenue for the three and nine months ended June 30, 2023 and 2022:

Three Months Ended June 30, 2023

Gas & Petroleum

Mechanical, and

Total revenue

7 unchanged sentences

Total revenue from contracts

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Gas & Petroleum

Mechanical, and

Total revenue

7 unchanged sentences

Total revenue from contracts

Six Months Ended March 31, 2023

Nine Months Ended June 30, 2023

Gas & Petroleum

9 unchanged sentences

Total revenue from contracts

Six Months Ended March 31, 2022

Nine Months Ended June 30, 2022

Gas & Petroleum

16 unchanged sentences

The timing of billings to customers may generate contract assets or contract liabilities.

During the six months ended March 31, 2023, we recognized revenue of $ 5.7 million that was included in the contract liability balance at September 30, 2022.

During the three and nine months ended June 30, 2023, we recognized revenue of $ 100,000 and $ 5.7 million, respectively, that was included in the contract liability balance at September 30, 2022.

Accounts receivable-trade, net of allowance for doubtful accounts, contract assets and contract liabilities consisted of the following:

March 31, 2023

June 30, 2023

September 30, 2022

Accounts receivable-trade, net of allowance for doubtful accounts

( 13,713,923 )

Contract assets

4 unchanged sentences

PERFORMANCE OBLIGATIONS

For the three and six months ended March 31, 2023, 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, 2022.

For the three and nine months ended June 30, 2023, 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, 2022.

Changes in contract transaction price can result from items such as executed or estimated change orders, and unresolved contract modifications and claims.

At March 31, 2023, the Company had $ 161.1 million in remaining unsatisfied performance obligations, in which revenue is expected to be recognized over the next twelve months.

At June 30, 2023, the Company had $ 157.0 million in remaining unsatisfied performance obligations, in which revenue is expected to be recognized over the next twelve months.

UNCOMPLETED CONTRACTS

Costs, estimated earnings, and billings on uncompleted contracts as of March 31, 2023 and September 30, 2022, are summarized as follows:

March 31, 2023

Costs, estimated earnings, and billings on uncompleted contracts as of June 30, 2023 and September 30, 2022, are summarized as follows:

June 30, 2023

September 30, 2022

2 unchanged sentences

Less billings to date

( 4,377,263 )

Costs and estimated earnings in excess of billed on uncompleted contracts

Less billings in excess of costs and estimated earnings on uncompleted contracts

Backlog at March 31, 2023 and September 30, 2022, was $ 224.6 million and $ 142.3 million, respectively.

( 4,377,263 )

Backlog at June 30, 2023 and September 30, 2022, was $ 185.9 million and $ 142.3 million, respectively.

FAIR VALUE MEASUREMENTS

The fair value measurement guidance of the Financial Accounting Standards Board (“FASB”) ASC defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States of America (“U.S.

The fair value measurement guidance of the Financial Accounting Standards Board (“FASB”) ASC defines fair value, establishes a framework for measuring fair value in accordance with U.S.

GAAP and specifies disclosures about fair value measurements.

10 unchanged sentences

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 $ 25.8 million at March 31, 2023 was $ 24.4 million.

The fair value of the aggregate principal amount of the Company’s fixed-rate debt of $ 27.2 million at June 30, 2023 was $ 25.3 million.

The fair value of the aggregate principal amount of the Company’s fixed-rate debt of $ 25.1 million, as restated, at September 30, 2022 was $ 24.3 million, as restated.

All other current assets and liabilities are carried at a net realizable value which approximates fair value because of their short duration to maturity.

(LOSS) EARNINGS PER SHARE

The amounts used to compute the (loss) earnings per share for the three and six months ended March 31, 2023 and 2022 are summarized below.

EARNINGS PER SHARE

The amounts used to compute the earnings per share for the three and nine months ended June 30, 2023 and 2022 are summarized below.

Three Months Ended

Six Months Ended

Net (loss) income, as restated

( 1,873,600 )

( 1,735,226 )

Nine Months Ended

Net income, as restated

Weighted average shares outstanding-basic

Weighted average shares-diluted

(Loss) earnings per share-basic

(Loss) earnings per share-diluted

Earnings per share-basic

Earnings per share-diluted

The components of income taxes are as follows:

Three Months Ended

March 31, 2023

March 31, 2022

Total income tax benefit

Six Months Ended

March 31, 2023

March 31, 2022

Total income tax (benefit) expense

The effective income tax rate for the three and six months ended March 31, 2023 was ( 25.8 %) and ( 29.6 %), as restated, respectively, as compared to ( 24.7 %), as restated, and 35.4 %, as restated, for the same periods in fiscal year 2022.

The effective income tax rate for the three and nine months ended June 30, 2023 was 30.5 % and 31.4 %, respectively, as compared to 29.0 % as restated, and 30.7 %, as restated, for the same periods in fiscal year 2022.

Effective income tax rates are estimates and may vary from period to period due to changes in the amount of taxable income and non-deductible expenses.

Major items that can affect the effective tax rate include amortization of goodwill and non-deductible amounts for per diem expenses.

Major items that can affect the effective tax rate include state taxes, amortization of goodwill, and non-deductible amounts for per diem expenses.

Three Months Ended

June 30, 2023

June 30, 2022

Total income tax expense

Nine Months Ended

June 30, 2023

June 30, 2022

Total income tax expense

The income tax effects of temporary differences giving rise to the deferred tax assets and liabilities are as follows:

9 unchanged sentences

A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

At March 31, 2023, the Company expects all net operating loss carryforwards to be realized in the near future.

At June 30, 2023, the Company expects all net operating loss carryforwards to be realized in the near future.

The Company does not believe that it has any unrecognized tax benefits included in its consolidated financial statements that require recognition.

10 unchanged sentences

The interest rate at September 30, 2022, was 5.5 %.

On January 19, 2023, the Company received an amendment to the agreement which increased the line of credit to $ 30.0 million, limited to a borrowing base calculation, which was approximately $ 12.75 million at March 31, 2023.

The maturity date remains June 28, 2023, with a variable interest rate equal to the “Wall Street Journal” Prime Rate with a floor of 4.5 %.

The interest rate at March 31, 2023 was 8.0 %.

The modified financial covenants for the quarter ended March 31, 2023, and all subsequent quarters, are below:

On January 19, 2023, the Company received an amendment to the agreement which increased the line of credit to $ 30.0 million with a maturity date of June 28, 2023.

On June 1, 2023, the agreement was renewed through June 28, 2024.

The line of credit is limited to a borrowing base calculation, which was approximately $ 24.4 million at June 30, 2023.

The outstanding balance on the line of credit was $ 16.2 million at June 30, 2023.

The line of credit has a variable interest rate equal to the “Wall Street Journal” Prime Rate with a floor of 4.5 %, which was 9.25 % at June 30, 2023.

The modified financial covenants for the quarter ended June 30, 2023, and all subsequent quarters, are below:

● Minimum tangible net worth of $ 28.0 million,

2 unchanged sentences

● Maximum debt to tangible net worth ratio (“TNW”) of 2.75x ,

● Each ratio and covenant shall be determined, tested, and measured as of each calendar quarter beginning March 31, 2023,

● Each ratio and covenant shall be determined, tested, and measured as of each calendar quarter beginning June 30, 2023,

● The Company shall maintain a ratio of Maximum Senior Funded Debt (“SFD”) to Earnings before Interest, Taxes, Depreciation and Amortization (“EBDITA”) equal to or less than 3.5 :1.

1 unchanged sentence

The covenant shall be tested quarterly, at the end of each fiscal quarter, with EBITDA based on the preceding four quarters.

The Company was in compliance with all covenants at March 31, 2023 and the Company projects to meet all covenant requirements for the next twelve months.

The Company was not in compliance with all covenants at June 30, 2023;

however, a waiver was received from the Company’s lender.

The Company projects to meet all covenant requirements for the next twelve months.

Insurance Premiums Financed

2 unchanged sentences

The Company makes a down payment in January and finances the remaining premium amount over eleven monthly payments.

At March 31, 2023 and September 30, 2022, the remaining balance of the insurance premiums was $ 2.5 million and $ 580,000 , respectively.

At June 30, 2023 and September 30, 2022, the remaining balance of the insurance premiums was $ 1.9 million and $ 580,000 , respectively.

Paycheck Protection Program Loans

13 unchanged sentences

The Company has recorded a short-term borrowing due to the SBA inquiry for the full $ 9.8 million, plus accrued interest for all periods presented.

A summary of short-term and long-term debt as of March 31, 2023 and September 30, 2022 is as follows:

During July 2023, management received notification from the SBA that two additional forgiveness applications related to the PPP Loans were under review.

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

The requested information was subsequently provided to the SBA through the Lender.

A summary of short-term and long-term debt as of June 30, 2023 and September 30, 2022 is as follows:

September 30,

Line of credit payable to bank, monthly interest at 9.25 %, final payment due by June 28, 2024, guaranteed by certain directors of the Company.

Paycheck Protection Program loans from Small Business Administration, including 1.0 % simple interest, initially forgiven in the fiscal year ended September 30, 2021.

Equipment line of credit payable to United Bank, $ 9.3 million available with no borrowings at June 30, 2023.

All borrowings between June 1, 2023 and December 1, 2023 have a fixed interest rate of 7.25 % .

After December 1, 2023, the line of credit turns into a fifty-four-month term note with a fixed interest rate of 7.25 % , final payment due June 1, 2028.

Paycheck Protection Program loans from Small Business Administration, 1.0 % simple interest, initially forgiven in the fiscal year ended September 30, 2021.

Final forgiveness decision has not been determined.

Term note payable to United Bank, WV Pipeline acquisition, due in monthly installments of $ 64,853 including fixed interest at 4.25 % , final payment due by March 25, 2026, secured by receivables and equipment, guaranteed by certain directors of the Company.

Notes payable to finance companies, due in monthly installments totaling $ 42,000 at March 31, 2023 and $ 60,000 at September 30, 2022, including interest ranging from 0.00 % to 5.50 % , final payments due April 2023 through August 2026, secured by equipment.

Note payable to finance company for insurance premiums financed, due in monthly installments totaling $ 327,000 in FY 2023 and $ 282,000 in FY 2022, including interest rate at 3.27 % , final payment due November 2023.

Term note payable to United Bank, WV Pipeline acquisition, due in monthly installments of $ 64,853 , including interest at 4.25 %, final payment due by March 25, 2026, secured by receivables and equipment, guaranteed by certain directors of the Company.

Notes payable to finance companies, due in monthly installments totaling $ 48,000 at June 30, 2023 and $ 60,000 at September 30, 2022, including interest ranging from 0.00 % to 5.50 %, final payments due July 2023 through August 2026, secured by equipment.

Note payable to finance company for insurance premiums financed, due in monthly installments totaling $ 327,000 in FY 2023 and $ 282,000 in FY 2022, including interest at 3.27 %, final payment due November 2023.

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.

1 unchanged sentence

Notes payable to bank, due in monthly installments totaling $ 59,932 , including fixed interest at 6.0 %, final payment due October 2027, secured by receivables and equipment, guaranteed by certain directors of the Company.

Notes payable to David Bolton and Daniel Bolton, due in annual installments totaling $ 500,000 , including fixed interest at 3.25 % , final payment due December 31, 2026, unsecured.

Notes payable to bank, due in monthly installments totaling $ 68,073 , including interest at 9.0 % , beginning February 2022 with final payment due September 2026, secured by equipment, guaranteed by certain directors of the Company.

Term note payable to United Bank, Tri-State Paving acquisition, due in monthly installments of $ 130,000 , including fixed interest at 4.25 % , final payment due by June 1, 2027, secured by receivables and equipment, guaranteed by certain directors of the Company.

Notes payable to Corns Enterprises, $ 1,000,000 with initial fair value of $ 936,000 , due in annual installments totaling $ 250,000 , including interest at 3.50 % , final payment due April 29, 2026, unsecured

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

Notes payable to bank, 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 interest at 9.25 %, with final payment due September 2026, secured by equipment, guaranteed by certain directors of the Company.

Term note payable to United Bank, Tri-State Paving acquisition, due in monthly installments of $ 129,910 , including interest at 4.25 %, final payment due by June 1, 2027, secured by receivables and equipment, guaranteed by certain directors of the Company.

Notes payable to Corns Enterprises, $ 1,000,000 with fair value of $ 936,000 , due in annual installments totaling $ 250,000 , including interest at 3.50 %, final payment due April 29, 2026, unsecured

Less current maturities

4 unchanged sentences

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 no t have a goodwill impairment at March 31, 2023 or September 30, 2022.

The Company did no t have a goodwill impairment at June 30, 2023 or September 30, 2022.

A table of the Company’s goodwill is below:

2 unchanged sentences

Ending balance

A table of the Company’s intangible assets subject to amortization at March 31, 2023 and September 30, 2022 is below:

Amortization and

Remaining Life at

A table of the Company’s intangible assets subject to amortization at June 30, 2023 and September 30, 2022 is below:

and Impairment

Remaining Life

Amortization and

Impairment Six

(in months) at

Impairment at

Ended June 30,

Net Book Value

Intangible assets:

June 30, 2023

Original Cost

March 31, 2023

June 30, 2023

September 30, 2022

March 31, 2023

at June 30, 2023

West Virginia Pipeline:

5 unchanged sentences

Total intangible assets

The amortization on identifiable intangible assets for the six months ended March 31, 2023 and 2022 was $ 265,401 and $ 195,856 , respectively.

The amortization on identifiable intangible assets for the three and nine months ended June 30, 2023 was $ 136,000 and $401,000, respectively.

The amortization on identifiable intangible assets for the three and nine months ended June 30, 2022 was $ 112,000 and $308,000, respectively.

Amortization expense associated with the identifiable intangible assets is expected to be as follows:

Amortization Expense

April 2023 to March 2024

April 2024 to March 2025

April 2025 to March 2026

April 2026 to March 2027

April 2027 to March 2028

July 2023 to June 2024

July 2024 to June 2025

July 2025 to June 2026

July 2026 to June 2027

July 2027 to June 2028

LEASE OBLIGATIONS

7 unchanged sentences

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, West Virginia facility, had a net present value of $ 236,000 at inception, and a carrying value of $ 167,000 at March 31, 2023.

The second operating lease, for the Chattanooga, Tennessee facility, had a net present value of $ 144,000 at inception, and a carrying value of $ 88,000 at March 31, 2023.

The first operating lease, for the Hurricane, West Virginia facility, had a net present value of $ 236,000 at inception, and a carrying value of $ 148,000 at June 30, 2023.

The second operating lease, for the Chattanooga, Tennessee facility, had a net present value of $ 144,000 at inception, and a carrying value of $ 72,000 at June 30, 2023.

The 4.5 % interest rate on the operating leases is based on the Company’s incremental borrowing rate at inception.

1 unchanged sentence

acquired on August 11, 2022, as part of the Ryan Environmental acquisition.

This lease agreement was initially for 31 vehicles to be used by 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, and carrying value of $ 1.7 million at March 31, 2023.

This lease agreement was initially for thirty-one vehicles with a net present value of $ 1.2 million.

The Company has subsequently added twenty-six leased vehicles with a net present value of $ 2.4 million.

The right-of-use operating lease has a carrying value of $ 3.2 million at June 30, 2023.

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, West Virginia facility, had a net present value of $ 140,000 at inception and a carrying value of $ 63,000 at March 31, 2023.

This lease, for the Bridgeport, West Virginia facility, had a net present value of $ 140,000 at inception and a carrying value of $ 21,000 at June 30, 2023.

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 acquired on March 28, 2023.

This lease, for the Winchester, Kentucky facility, had a net present value of $ 290,000 at inception and a carrying value of $ 273,000 at March 31, 2023.

This lease, for the Winchester, Kentucky facility, had a net present value of $ 290,000 at inception and a carrying value of $ 247,000 at June 30, 2023.

The 7.75 % 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 March 31, 2023 can be found below:

Schedules related to the Company’s operating leases at June 30, 2023 can be found below:

Remaining liability

March 31, 2023

June 30, 2023

September 30, 2022

7 unchanged sentences

Operating Lease Maturity Schedule

April 2023-March 2024

April 2024-March 2025

April 2025-March 2026

April 2026-March 2027

July 2023 to June 2024

July 2024 to June 2025

July 2025 to June 2026

July 2026 to June 2027

Less amounts representing interest

Present value of operating lease liabilities

Six months ended

Three Months Ended

Nine Months Ended

Three Months Ended

Nine Months Ended

Operating Lease Expense

March 31, 2023

June 30, 2023

June 30, 2022

Operating lease 1

11 unchanged sentences

Total amortization and interest

Six months ended

Three Months Ended

Nine Months Ended

Three Months Ended

Nine Months Ended

Cash Paid for Operating Leases

March 31, 2023

June 30, 2023

June 30, 2022

Operating lease 1

5 unchanged sentences

Rental expense can vary by reporting period 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 (loss), was $ 1.5 million and $ 1.6 million, respectively, for the three months ended March 31, 2023 and 2022 and $ 4.2 million and $ 3.5 million, respectively, for the six months ended March 31, 2023 and 2022.

Rental expense, which is included in cost of goods sold on the consolidated statements of income was $ 2.5 million and $ 1.7 million, respectively, for the three months ended June 30, 2023 and 2022 and $ 6.8 million and $ 5.3 million, respectively, for the nine months ended June 30, 2023 and 2022.

SUBSEQUENT EVENTS

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements