0001144204-18-028023.txt : 20180514 0001144204-18-028023.hdr.sgml : 20180514 20180514140748 ACCESSION NUMBER: 0001144204-18-028023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 46 CONFORMED PERIOD OF REPORT: 20180331 FILED AS OF DATE: 20180514 DATE AS OF CHANGE: 20180514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Energy Services of America CORP CENTRAL INDEX KEY: 0001357971 STANDARD INDUSTRIAL CLASSIFICATION: WATER, SEWER, PIPELINE, COMM AND POWER LINE CONSTRUCTION [1623] IRS NUMBER: 204606266 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-32998 FILM NUMBER: 18829847 BUSINESS ADDRESS: STREET 1: 75 WEST 3RD AVE. CITY: HUNTINGTON STATE: WV ZIP: 25701 BUSINESS PHONE: (304) 522-3868 MAIL ADDRESS: STREET 1: 75 WEST 3RD AVE. CITY: HUNTINGTON STATE: WV ZIP: 25701 FORMER COMPANY: FORMER CONFORMED NAME: Energy Services Acquisition Corp. DATE OF NAME CHANGE: 20060330 10-Q 1 tv493688_10q.htm FORM 10-Q

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

(Mark One)

 

xQuarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended March 31, 2018

 

¨Transition report pursuant to Section 13 or 15(d) of the Securities Exchange act of 1934

 

For the transition period from _______________ to _________________

 

Commission File Number: 001-32998

 

Energy Services of America Corporation

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware   20-4606266
(State or Other Jurisdiction of Incorporation or Organization)   (I.R.S. Employer Identification Number)
     
75 West 3rd Ave., Huntington, West Virginia   25701
(Address of Principal Executive Office)   (Zip Code)

 

(304) 522-3868

(Registrant’s Telephone Number Including Area Code)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such requirements for the past 90 days.    YES    x     NO  ¨.

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   YES    x     NO  ¨.

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, or an “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ¨ Accelerated filer ¨
       
Non-accelerated filer ¨ (Do not check if a smaller reporting company)
       
    Smaller reporting company x
       
    Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      ¨

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  YES    ¨     NO      x

 

As of May 1, 2018, there were 14,239,836 outstanding shares of the Registrant’s Common Stock.

 

 

 

 

 

 

Part 1: Financial Information  
   
Item 1. Financial Statements (Unaudited):  
   
Consolidated Balance Sheets 1
   
Consolidated Statements of Income 2
   
Consolidated Statements of Cash Flows 3
   
Consolidated Statements of Changes in Shareholders’ Equity 4
   
Notes to Unaudited Consolidated Financial Statements 5
   
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations 12
   
Item 3.  Quantitative and Qualitative Disclosures About Market Risk 27
   
Item 4.  Controls and Procedures 27
   
Part II:  Other Information  
   
Item 1.   Legal Proceedings 28
   
Item 1A. Risk Factors 28
   
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds 28
   
Item 6.   Exhibits 29
   
Signatures 30

 

 

 

Part 1. Financial Information

 

Item 1. Financial Statements (Unaudited):

 

Energy Services of America Corporation

Consolidated Balance Sheets

 

   March 31,   September 30, 
   2018   2017 
   (Unaudited)     
Assets          
Current assets          
Cash and cash equivalents  $2,841,953   $1,663,222 
Accounts receivable-trade   12,146,234    23,140,272 
Allowance for doubtful accounts   (108,771)   (108,200)
Retainages receivable   1,354,679    3,773,892 
Other receivables   98,701    96,242 
Costs and estimated earnings in excess of billings on uncompleted contracts   5,697,269    5,350,884 
Prepaid expenses and other   5,072,833    4,044,731 
Assets of discontinued operations   12,303    12,303 
Total current assets   27,115,201    37,973,346 
           
Property, plant and equipment, at cost   47,609,657    48,436,122 
less accumulated depreciation   (29,616,656)   (29,243,614)
Total fixed assets   17,993,001    19,192,508 
           
Long-term notes receivable   137,281    137,281 
           
Total assets  $45,245,483   $57,303,135 
           
Liabilities and shareholders' equity          
Current liabilities          
Current maturities of long-term debt  $4,470,279   $4,562,918 
Lines of credit and short term borrowings   4,859,188    9,432,968 
Accounts payable   2,887,144    5,522,143 
Accrued expenses and other current liabilities   2,524,304    4,302,611 
Billings in excess of costs and estimated earnings on uncompleted contracts   2,667,983    2,173,965 
Liabilities of discontinued operations   28,671    28,671 
Total current liabilities   17,437,569    26,023,276 
           
Long-term debt, less current maturities   7,504,712    9,702,483 
Deferred income taxes payable   125,958    446,557 
Total liabilities   25,068,239    36,172,316 
           
Shareholders' equity          
           
Preferred stock, $.0001 par value
Authorized 1,000,000 shares, 206 issued for March 31, 2018 and September 30, 2017
   -    - 
Common stock, $.0001 par value
Authorized 50,000,000 shares 14,839,836 issued and 14,239,836 outstanding for March 31, 2018 shares  and September 30, 2017
   1,484    1,484 
           
Treasury stock, 600,000 shares at March 31, 2018 and September 30, 2017   (60)   (60)
           
           
Additional paid in capital   61,289,260    61,289,260 
Retained earnings (deficit)   (41,113,440)   (40,159,865)
Total shareholders' equity   20,177,244    21,130,819 
           
Total liabilities and shareholders' equity  $45,245,483   $57,303,135 

 

The Accompanying Notes are an Integral Part of These Financial Statements

 

1 

 

 

Energy Services of America Corporation

Consolidated Statements of Income

Unaudited

  

   Three Months Ended   Three Months Ended   Six Months Ended   Six Months Ended 
   March 31,   March 31,   March 31,   March 31, 
   2018   2017   2018   2017 
                 
Revenue  $23,093,033   $25,371,605   $55,640,636   $62,868,477 
                     
Cost of revenues   22,036,935    23,859,453    52,609,084    56,671,538 
                     
Gross profit   1,056,098    1,512,152    3,031,552    6,196,939 
                     
Selling and administrative expenses   1,956,356    1,939,278    3,965,447    4,134,888 
Income (loss) from operations   (900,258)   (427,126)   (933,895)   2,062,051 
                     
Other income (expense)                    
Interest income   61    -    132,342    - 
Other nonoperating expense   (47,023)   (40,231)   (102,147)   (111,660)
Interest expense   (243,708)   (143,546)   (539,552)   (374,515)
Gain on sale of equipment   19,670    41,841    388,375    68,831 
    (271,000)   (141,936)   (120,982)   (417,344)
                     
Income (loss) before income taxes   (1,171,258)   (569,062)   (1,054,877)   1,644,707 
                     
Income tax expense (benefit)   (223,683)   (256,523)   (255,802)   718,589 
                     
Net income (loss)   (947,575)   (312,539)   (799,075)   926,118 
                     
Dividends on preferred stock   77,250    77,250    154,500    154,500 
                     
Net income (loss) available to common shareholders  $(1,024,825)  $(389,789)  $(953,575)  $771,618 
                     
Weighted average shares outstanding-basic   14,239,836    14,239,836    14,239,836    14,239,836 
                     
Weighted average shares-diluted   14,239,836    14,239,836    14,239,836    17,673,169 
Earnings (loss) per share from continuing operations available to common shareholders  $(0.072)  $(0.027)  $(0.067)  $0.054 
                     
Earnings (loss) per share from continuing operations-diluted available to common shareholders  $(0.072)  $(0.027)  $(0.067)  $0.044 
                     
Earnings (loss) per share available to common shareholders  $(0.072)  $(0.027)  $(0.067)  $0.054 
                     
Earnings (loss) per share-diluted available to common shareholders  $(0.072)  $(0.027)  $(0.067)  $0.044 

 

The Accompanying Notes are an Integral Part of These Financial Statements

 

2 

 

 

Energy Services of America Corporation

Consolidated Statements of Cash Flows

Unaudited

  

   Six Months Ended   Six Months Ended 
   March 31,   March 31, 
   2018   2017 
Cash flows from operating activities:          
Net income (loss)  $(799,075)  $926,118 
           
Adjustments to reconcile net income to net cash provided by operating activities:          
           
Depreciation expense   2,114,346    1,406,151 
Gain on sale/disposal of equipment   (388,375)   (68,831)
Provision for deferred taxes   (320,599)   92,000 
Decrease in contracts receivable   10,994,609    12,487,429 
Decrease (increase) in retainage receivable   2,419,213    (560,318)
(Increase) decrease in other receivables   (2,459)   6,787 
(Increase) decrease in cost and estimated earnings in excess of billings on uncompleted contracts   (346,385)   1,630,865 
Increase in prepaid expenses   (1,028,102)   (2,498,964)
Decrease in accounts payable   (2,634,999)   (1,356,188)
Decrease in accrued expenses   (1,778,307)   (1,664,100)
Increase (decrease) in billings in excess of cost and estimated earnings on uncompleted contracts   494,018    (606,334)
Decrease in income taxes payable   -    (890,526)
Net cash provided by operating activities   8,723,885    8,904,089 
           
Cash flows from investing activities:          
Investment in property and equipment   (969,804)   (3,119,369)
Proceeds from sales of property and equipment   443,340    162,573 
Net cash used in investing activities   (526,464)   (2,956,796)
           
Cash flows from financing activities:          
Borrowings on lines of credit and short term debt, net of (repayments)   (4,573,780)   (3,990,175)
Preferred dividends paid   (154,500)   (154,500)
Principal payments on long term debt   (2,290,410)   (1,442,848)
Net cash used in financing activities   (7,018,690)   (5,587,523)
           
Increase in cash and cash equivalents   1,178,731    359,770 
Cash beginning of period   1,675,525    3,828,093 
Cash end of period  $2,854,256   $4,187,863 
           
Supplemental schedule of noncash investing and financing activities:          
Insurance premiums financed  $3,130,859   $3,524,350 
Accrued dividends on preferred stock  $154,500   $154,500 
           
Supplemental disclosures of cash flows information:          
           
Cash paid during the year for:          
Interest  $539,552   $374,515 
Income taxes  $21,357   $1,139,306 

 

The Consolidated Statements of Cash Flows includes the discontinued operation, S.T. Pipeline.

 

The Accompanying Notes are an Integral Part of These Financial Statements

 

3 

 

 

Energy Services of America Corporation

Consolidated Statements of Changes in Shareholders’ Equity

For the six months ended March 31, 2018 and 2017

 

                       Total 
   Common Stock   Additional Paid   Retained   Treasury   Shareholders' 
   Shares   Amount   in Capital   Earnings (deficit)   Stock   Equity 
                         
Balance at September 30, 2016   14,239,836   $1,484   $61,289,260   $(38,766,992)  $(60)  $22,523,692 
                               
Net income   -    -    -    926,118    -    926,118 
                               
Accrued preferred dividends   -    -    -    (154,500)   -    (154,500)
                               
Balance at March 31, 2017   14,239,836   $1,484   $61,289,260   $(37,995,374)  $(60)  $23,295,310 
                               
Balance at September 30, 2017   14,239,836   $1,484   $61,289,260   $(40,159,865)  $(60)  $21,130,819 
                               
Net loss   -    -    -    (799,075)   -    (799,075)
                               
Accrued preferred dividends   -    -    -    (154,500)   -    (154,500)
                               
Balance at March 31, 2018   14,239,836   $1,484   $61,289,260   $(41,113,440)  $(60)  $20,177,244 

 

The Accompanying Notes are an Integral Part of These Financial Statements

 

4 

 

 

ENERGY SERVICES OF AMERICA CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

1. BUSINESS AND ORGANIZATION:

 

Energy Services of America Corporation (“Energy Services” or the “Company”) was formed in 2006 as a special purpose acquisition corporation, or blank check company. On August 15, 2008, Energy Services completed the acquisitions of S.T. Pipeline, Inc. (“S.T. Pipeline”) and C.J. Hughes Construction Company, Inc. (“C.J. Hughes”).

 

Wholly owned subsidiary C.J. Hughes is a general contractor primarily engaged in pipeline construction for utility companies. C.J. Hughes operates primarily in the mid-Atlantic region of the United States. Contractors Rental Corporation (“Contractors Rental”), a wholly owned subsidiary of C.J. Hughes provides union building trade employees for projects managed by C.J. Hughes. Nitro Construction Services, Inc. (“Nitro”), a wholly owned subsidiary of C. J. Hughes, is an electrical and mechanical contractor that provides its services to the power, chemical and automotive industries. Nitro operates primarily in the mid-Atlantic region of the United States. Pinnacle Technical Solutions, Inc. (“Pinnacle”), a wholly owned subsidiary of Nitro, operates as a data storage facility within Nitro’s office building. Pinnacle is supported by Nitro and has no employees of its own. All of the C.J. Hughes, Nitro, and Contractors Rental production personnel are union members of various related construction trade unions and are subject to collective bargaining agreements that expire at varying time intervals. S.T. Pipeline engaged in the construction of natural gas pipelines for utility companies in various states, mostly in the mid-Atlantic area of the country. On May 14, 2013, the Company liquidated the operations of S.T. Pipeline and realized $1.9 million from the sale of assets. The financial position and results of operations of S.T. Pipeline have been presented as discontinued operations in the accompanying financial statements for all presented periods.

 

The Company’s stock is quoted under the symbol “ESOA” on the OTC QB market place operated by the OTC Markets Group.

 

Interim Financial Statements

 

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto for the years ended September 30, 2017 and 2016 included in the Company’s Annual Report on Form 10-K filed with the SEC on December 15, 2017. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the interim financial reporting rules and regulations of the SEC. 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, 2018 are not necessarily indicative of the results to be expected for the full year or any other interim period.

 

5 

 

 

Principles of Consolidation

 

The consolidated financial statements of Energy Services include the accounts of Energy Services and its wholly owned subsidiary, C.J. Hughes and its subsidiaries, Nitro, Pinnacle, and Contractors Rental. S.T. Pipeline has been shown as discontinued operations for the three and six months ended March 31, 2018 and 2017. All significant intercompany accounts and transactions have been eliminated in the consolidation. Unless the context requires otherwise, references to Energy Services include Energy Services and C.J. Hughes and C.J. Hughes’ subsidiaries.

 

Reclassifications

 

Certain reclassifications have been made in prior years’ financial statements to conform to classifications used in the current year.

 

2. UNCOMPLETED CONTRACTS

 

Costs, estimated earnings, and billings on uncompleted contracts as of March 31, 2018 and September 30, 2017 are summarized as follows:

 

   March 31, 2018   September 30, 2017 
         
Costs incurred on uncompleted contracts  $122,803,569   $143,738,101 
           
Estimated earnings, net of estimated losses   7,096,048    9,573,781 
    129,899,617    153,311,882 
           
Less billing to date   126,870,331    150,134,963 
   $3,029,286   $3,176,919 
           
Costs and estimated earnings in excess of  billings on uncompleted contracts  $5,697,269   $5,350,884 
           
Less billings in excess of costs and estimated earnings on uncompleted contracts   2,667,983    2,173,965 
   $3,029,286   $3,176,919 

 

Backlog at March 31, 2018 and September 30, 2017 was $55.1 million and $62.5 million, respectively. In April 2018, the company was awarded a transmission pipeline project valued at $47.0 million. This project is not included in the March 31, 2018 backlog.

 

6 

 

 

3. CLAIMS

 

The Company does not have any claims recorded as of March 31, 2018. Claims receivable is a component of cost and estimated earnings in excess of billing.

 

4. FAIR VALUE MEASUREMENTS

 

The Fair Value Measurements and Disclosures Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands 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 Measurements Topic of the FASB Accounting Standards Codification 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.

 

As noted above, there is a three-level valuation hierarchy for disclosure of fair value measurements. 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:

 

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 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 to unrelated parties was estimated using a discounted cash flow analysis and a yield rate that was estimated based on the borrowing rates for bank loans with similar terms and maturities. The fair value of the aggregate principal amount of the Company’s fixed-rate debt of $13.2 million at March 31, 2018 was $13.1 million.

  

The Company uses fair value measurements on a non-recurring basis in its assessment of goodwill and long-lived assets held and used. In accordance with its annual impairment test during the quarter ended September 30, 2012, the Company recorded a goodwill impairment charge of $36.9 million, which represented the entire amount of goodwill carried on the Company’s balance sheet. Refer to Note 4, Goodwill and Intangible Assets, of the Company’s Annual Report on Form 10-K for the year ended September 30, 2017 for further information.

 

7 

 

 

5. DISCONTINUED OPERATIONS

 

Due to organizational changes and operating losses incurred in fiscal year 2012, the Company decided to discontinue the operations of its wholly owned subsidiary S.T Pipeline. On May 14, 2013, the Company liquidated the operations of S.T. Pipeline and realized $1.9 million from the sale.

 

The Company did not have income from discontinued operations for the three and six months ended March 31, 2018 and 2017.

 

The following table shows the components of assets and liabilities that are classified as discontinued operations in the Company’s consolidated balance sheets at March 31, 2018 and September 30, 2017.

 

   March 31,   September 30, 
   2018   2017 
         
Cash  $12,303   $12,303 
Assets of discontinued operations-current   12,303    12,303 
Total assets of discontinued operations   12,303    12,303 
           
Accrued expenses and other current liabilities   28,671    28,671 
Liabilities of discontinued operations-current   28,671    28,671 
Total liabilities of discontinued operations   28,671    28,671 
           
Net liabilities  $(16,368)  $(16,368)

 

The $29,000 in accrued expenses and other current liabilities at March 31, 2018 represents a reserve for any unexpected expenses that may be incurred by the discontinued operation. As of March 31, 2018, the Company had paid all debts known to exist to the unsecured creditors of the discontinued operation.

 

8 

 

 

6. EARNINGS PER SHARE

 

The amounts used to compute the earnings per share for the three and six months ended March 31, 2018 and 2017 are summarized below.

 

   Three Months Ended   Three Months Ended   Six Months Ended   Six Months Ended 
   March 31,   March 31,   March 31,   March 31, 
   2018   2017   2018   2017 
                 
Income (loss) from continuing operations  $(947,575)  $(312,539)  $(799,075)  $926,118 
                     
Dividends on preferred stock   77,250    77,250    154,500    154,500 
                     
Income (loss) available to common shareholders-continuing operations  $(1,024,825)  $(389,789)  $(953,575)  $771,618 
                     
Weighted average shares outstanding   14,239,836    14,239,836    14,239,836    14,239,836 
                     
Weighted average shares outstanding-diluted   14,239,836    14,239,836    14,239,836    17,673,169 
                     
Earnings (loss) per share from continuing operations available to common shareholders  $(0.072)  $(0.027)  $(0.067)  $0.054 
                     
Earnings (loss) per share from continuing operations available to common shareholders-diluted  $(0.072)  $(0.027)  $(0.067)  $0.044 
                     
Income from discontinued operations  $-   $-   $-   $- 
                     
Weighted average shares outstanding   14,239,836    14,239,836    14,239,836    14,239,836 
                     
Weighted average shares outstanding-diluted   14,239,836    14,239,836    14,239,836    17,673,169 
                     
Earnings per share from discontinued operations  $-   $-   $-   $- 
                     
Earnings per share from discontinued operations-diluted  $-   $-   $-   $- 
                     
Net income (loss)  $(947,575)  $(312,539)  $(799,075)  $926,118 
                     
Dividends on preferred stock   77,250    77,250    154,500    154,500 
                     
Net income (loss) available to common shareholders  $(1,024,825)  $(389,789)  $(953,575)  $771,618 
                     
Earnings (loss) per share available to common shareholders  $(0.072)  $(0.027)  $(0.067)  $0.054 
                     
Earnings (loss) per share available to common shareholders-diluted  $(0.072)  $(0.027)  $(0.067)  $0.044 

 

9 

 

 

7. INCOME TAXES

 

The components of income taxes are as follows:

 

   Six months ended March 31, 
   2018   2017 
         
Federal          
Current  $(152,484)  $534,767 
Deferred   (63,045)   75,371 
Total   (215,529)   610,138 
           
State          
Current   (63,716)   96,539 
Deferred   23,443    11,912 
Total   (40,273)   108,451 
           
Total income tax expense (benefit)  $(255,802)  $718,589 

 

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

 

   March 31,   September 30, 
   2018   2017 
         
Deferred income tax assets          
           
Long-term          
Net operating loss carryforward  $461,602   $180,605 
Other deferred assets   861,284    1,213,461 
Total deferred income tax assets   1,322,886    1,394,066 
           
Continuing operations   1,322,886    1,394,066 
Total deferred income tax assets   1,322,886    1,394,066 
           
Deferred income tax liabilities          
           
Long-term          
Property and equipment  $1,471,216   $1,857,088 
Other deferred liabilities   (22,372)   (16,465)
Total deferred income tax liabilities-LT   1,448,844    1,840,623 
           
Continuing operations   1,448,844    1,840,623 
Total deferred income tax liabilities-LT   1,448,844    1,840,623 
           
Net deferred income tax liabilities  $125,958   $446,557 

 

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.

 

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8. SHORT-TERM AND LONG-TERM DEBT

 

A summary of short-term and long-term debt as of March 31, 2018 and September 30, 2017 is as follows:

 

   March 31,   September 30, 
   2018   2017 
         
Line of credit payable to bank, monthly interest at 4.99%, final payment due by February 27, 2018.  $2,582,199   $9,112,572 
Renewal signed on March 21, 2018 to extend until February 27, 2019.          
           
Notes payable to finance companies, due in monthly installments  totaling $63,673 including interest ranging from 1.0% to 10.09%, final payments due through April 2018 to June 2019, secured by equipment.   1,659,466    2,042,524 
           
Note payable to finance company for insurance premiums financed, due in monthly installments  totaling $288,581 in 2018 and $320,396 in 2017, including interest rate at 2.77%, final payment due October 2018.   2,276,989    320,396 
           
Notes payable to bank, due in monthly installments totaling  $7,799, including interest at 4.75%, final  payment due November 2034 secured by  building and property.   1,074,469    1,094,631 
           
Notes payable to bank, due in monthly installments totaling  $11,506, including interest at 5.0%, final  payment due November 2025 secured by  building and property.   900,545    949,481 
           
Notes payable to bank, due in monthly installments totaling  $172,473, including interest at 6.5%, final  payment due February 2019 secured by  equipment.   1,694,649    2,655,515 
           
Notes payable to bank, due in monthly installments totaling  $30,914, including interest at 5.0%, final  payment due February 2019 secured by  equipment.   332,961    507,507 
           
Notes payable to bank, due in monthly installments totaling  $94,333, including interest at 4.99%, final  payment due September 2022 secured by  equipment.   4,527,648    5,000,000 
           
Notes payable to bank, due in monthly installments totaling  $46,405, including interest at 5.00%, final  payment due September 2021 secured by  equipment.   1,785,253    2,015,743 
           
Total debt   16,834,179    23,698,369 
           
Less current maturities   9,329,467    13,995,886 
           
Total long term debt  $7,504,712   $9,702,483 

 

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

You should read the following discussion of the financial condition and results of operations of Energy Services in conjunction with the “Financial Statements” appearing in this report as well as the historical financial statements and related notes contained elsewhere herein. Among other things, those historical consolidated financial statements include more detailed information regarding the basis of presentation for the following information. The term “Energy Services” refers to the Company, C.J. Hughes and C.J. Hughes’ wholly owned subsidiaries on a consolidated basis.

 

Forward Looking Statements

 

Within Energy Services’ consolidated financial statements and this discussion and analysis of the financial condition and results of operations, there are included statements reflecting assumptions, expectations, projections, intentions or beliefs about future events that are intended as “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “project,” “forecast,” “may,” “will,” “should,” “could,” “expect,” “believe,” “intend” and other words of similar meaning.

 

These forward-looking statements are not guarantees of future performance and involve or rely on a number of risks, uncertainties, and assumptions that are difficult to predict or beyond Energy Services’ control. Energy Services has based its forward-looking statements on management’s beliefs and assumptions based on information available to management at the time the statements are made. Actual outcomes and results may differ materially from what is expressed, implied and forecasted by forward-looking statements and any or all of Energy Services’ forward-looking statements may turn out to be wrong. The accuracy of such statements can be affected by inaccurate assumptions and by known or unknown risks and uncertainties.

 

All of the forward-looking statements, whether written or oral, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements or that are otherwise included in this report. In addition, Energy Services does not undertake and expressly disclaims any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this report or otherwise.

 

Company Overview

 

Energy Services of America Corporation (“Energy Services” or the “Company”) was formed in 2006 as a special purpose acquisition corporation, or blank check company. On August 15, 2008, Energy Services completed the acquisitions of S.T. Pipeline, Inc. (“S.T. Pipeline”) and C.J. Hughes Construction Company, Inc. (“C.J. Hughes”).

 

Wholly owned subsidiary C.J. Hughes is a general contractor primarily engaged in pipeline construction for utility companies. C.J. Hughes operates primarily in the mid-Atlantic region of the United States. Contractors Rental Corporation (“Contractors Rental”), a wholly owned subsidiary of C.J. Hughes provides union building trade employees for projects managed by C.J. Hughes. Nitro Construction Services, Inc. (“Nitro”), a wholly owned subsidiary of C. J. Hughes, is an electrical and mechanical contractor that provides its services to the power, chemical and automotive industries.

 

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Nitro operates primarily in the mid-Atlantic region of the United States. Pinnacle Technical Solutions, Inc. (“Pinnacle”), a wholly owned subsidiary of Nitro, operates as a data storage facility within Nitro’s office building. Pinnacle is supported by Nitro and has no employees of its own. All of the C.J. Hughes, Nitro, and Contractors Rental production personnel are union members of various related construction trade unions and are subject to collective bargaining agreements that expire at varying time intervals. S.T. Pipeline engaged in the construction of natural gas pipelines for utility companies in various states, mostly in the mid-Atlantic area of the country. On May 14, 2013, the Company liquidated the operations of S.T. Pipeline and realized $1.9 million from the sale of assets. The financial position and results of operations of S.T. Pipeline have been presented as discontinued operations in the accompanying financial statements for all presented periods.

 

Energy Services is engaged in providing contracting services for energy related companies. Currently Energy Services primarily services the gas, petroleum, power, chemical and automotive industries, though it does some other incidental work such as water and sewer projects. 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 majority of the Company’s customers are located in West Virginia, Virginia, Ohio, Pennsylvania, and Kentucky. The Company builds, but does not own, natural gas pipelines for its customers that are part of both interstate and intrastate pipeline systems that move natural gas from producing regions to consumption regions as well as build and replace gas line services to individual customers of the various utility companies.

 

The Company’s consolidated operating revenues for the three months ended March 31, 2018 were $23.1 million of which 65.3% was attributable to electrical and mechanical services, 27.1% to gas & petroleum work, and 7.6% to water and sewer installations and other ancillary services. The Company’s consolidated operating revenues for the six months ended March 31, 2018 were $55.6 million of which 57.9% was attributable to electrical and mechanical services, 34.2% to gas & petroleum work, and 7.9% to water and sewer installations and other ancillary services.

 

The Company’s consolidated operating revenues for the three months ended March 31, 2017 were $25.4 million of which 48.1% was attributable to electrical and mechanical services, 44.1% to gas & petroleum work, and 7.8% to water and sewer installations and other ancillary services. The Company’s consolidated operating revenues for the six months ended March 31, 2017 were $62.9 million of which 52.1% was attributable to gas & petroleum work, 40.8% to electrical and mechanical services, and 7.1% to water and sewer installations and other ancillary services.

 

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Energy Services’ customers include many of the leading companies in the industries it serves, including:

 

Mountaineer Gas

Columbia Gas Transmission

Columbia Gas Distribution

Marathon Petroleum

American Electric Power

Toyota Motor Manufacturing

Bayer Chemical

Dow Chemical

Kentucky American Water

Various state, county and municipal public service districts.

 

The Company enters into various types of contracts, including competitive unit price, cost-plus (or time and materials basis) and fixed price (lump sum) contracts. The terms of the contracts will vary from job to job and customer to customer though most contracts are on the basis of either unit pricing, in which the Company agrees to do the work for a price per unit of work performed or for a fixed amount for the entire project. Most of the Company’s projects are completed within one year of the start of the work. On occasion, the Company’s customers will require the posting of performance and/or payment bonds upon execution of the contract, depending upon the nature of the work performed. The Company generally recognizes revenue on unit price and cost-plus contracts when units are complete, or services are performed. Fixed price contracts usually result in recording revenues as work on the contract progresses on a percentage of completion basis. Under this accounting method, revenue is recognized based on the percentage of total costs incurred to date in proportion to total estimated costs at completion. Many contracts also include retention provisions under which a percentage of the contract price is withheld until the project is complete and has been accepted by the customer.

 

Energy Services’ sales force consists of industry professionals with significant relevant sales experience, who utilize industry contacts and available public data to determine how to most appropriately market the Company’s line of products. The Company relies on direct contact between its sales force and customers’ engineering and contracting departments in order to obtain new business.

 

Seasonality: Fluctuation of Results

 

Our revenues and results of operations can and usually are subject to seasonal variations. These variations are the result of weather, customer spending patterns, bidding seasons and holidays. The first quarter of the calendar year is typically the slowest in terms of revenues because inclement weather conditions causes delays in production and customers usually do not plan large projects during that time. While usually better than the first quarter, the second calendar year quarter often has some inclement weather which can cause delays in production, reducing the revenues the Company receives and/or increasing the production costs. The third and fourth calendar year quarters usually are less impacted by weather and usually have the largest number of projects underway. Many projects are completed in the fourth calendar year quarter and revenues are often impacted by customers seeking to either spend their capital budget for the year or scale back projects due to capital budget overruns.

 

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In addition to the fluctuations discussed above, the pipeline industry can be highly cyclical, reflecting variances in capital expenditures in proportion to energy price fluctuations. As a result, our volume of business may be adversely affected by where our customers are in the cycle and thereby their financial condition as to their capital needs and access to capital to finance those needs. Accordingly, our operating results in any particular quarter or year may not be indicative of the results that can be expected for any other quarter or any other year.

 

Forbearance Agreement and Financing Arrangements

 

On November 28, 2012, the Company entered into a Forbearance Agreement with United Bank, Inc. (West Virginia), Summit Community Bank (West Virginia), and First Guaranty Bank (Louisiana) related to our revolving line of credit and term debt as reported in the Company’s November 29, 2012 Form 8-K filing. The Forbearance Agreement, among other things, required the Company to close S.T. Pipeline and dispose of its assets. The Company was also required to prepare recommendations relating to the on-going operations of Nitro, C.J. Hughes, and Contractors Rental, including refinancing, sale or liquidation of the companies by May 31, 2013.

 

On January 31, 2014, the Company entered into a financing arrangement (“Term Note”) with United Bank, Inc. and Summit Community Bank. The financing arrangement is a five-year term loan in the amount of $8.8 million. In addition, the Company entered into a separate five-year term loan agreement with First Guaranty Bank for $1.6 million. Taken together, the $10.4 million in new financings superseded the prior financing arrangements the Company had with United Bank, Inc. and other lenders. As a result of entering into the new financings, United Bank, Inc. and the other lenders of the Company agreed to terminate their Forbearance Agreement with the Company. This was reported in the Company’s February 4, 2014 Form 8-K filing. The loan is collateralized by the Company’s accounts receivable and equipment.

 

On September 16, 2015, the Company entered into a $2.5 million Non-Revolving Note agreement with United Bank, Inc. This six-year agreement gave the Company access to a $2.5 million line of credit (“Equipment Line of Credit”), specifically for the purchase of equipment, for the period of one year with an interest rate of 5.0%. After the first year, all borrowings against the Equipment Line of Credit will be converted to a five-year term note agreement with an interest rate of 5.0%. As of March 31, 2018, the Company had borrowed $2.46 million against this line of credit and made principal payments of $674,000. The loan is collateralized by the equipment purchased under this agreement.

 

On June 28, 2017, the Company entered into a $5.0 million Non-Revolving Note agreement with United Bank, Inc. This five-year agreement gave the Company access to a $5.0 million line of credit (“Equipment Line of Credit 2017”), specifically for the purchase of equipment, for a period of three months with an interest rate of 4.99%. After three months, all borrowings against the Equipment Line of Credit 2017 were converted to a five-year term note agreement with an interest rate of 4.99%. As of March 31, 2018, the Company had borrowed $5.0 million against this line of credit and made principal payments of $474,000. The loan is collateralized by the equipment purchased under this agreement.

 

On March 21, 2018, the Company entered into a financing agreement (“Operating Line of Credit (2018)”) with United Bank, Inc. to provide the Company with a $15.0 million revolving line of credit. The interest rate on the line of credit is the “Wall Street Journal” Prime Rate (the index) with a floor of 4.99%. The effective date of this agreement was February 27, 2018 and is a renewal of the $15.0 million revolving line of credit (“Operating Line of Credit (2017)”) entered into with United Bank, Inc. effective February 27, 2017. At March 31, 2018, the balance on this line of credit was $2.6 million. The line of credit is collateralized by the Company’s accounts receivable and equipment.

 

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Second Quarter Overview

 

The following is an overview of results from operations for the three and six months ended March 31, 2018 and 2017.

 

   Three Months Ended   Three Months Ended   Six Months Ended   Six Months Ended 
   March 31,   March 31,   March 31,   March 31, 
   2018   2017   2018   2017 
                 
Continuing Operations                    
                     
Revenue  $23,093,033   $25,371,605   $55,640,636   $62,868,477 
Cost of revenues   22,036,935    23,859,453    52,609,084    56,671,538 
Gross profit   1,056,098    1,512,152    3,031,552    6,196,939 
Selling & administrative expenses   1,956,356    1,939,278    3,965,447    4,134,888 
Income (loss) from operations   (900,258)   (427,126)   (933,895)   2,062,051 
Other expense   (271,000)   (141,936)   (120,982)   (417,344)
Income (loss) before income tax   (1,171,258)   (569,062)   (1,054,877)   1,644,707 
Income tax expense (benefit)   (223,683)   (256,523)   (255,802)   718,589 
Net income (loss)   (947,575)   (312,539)   (799,075)   926,118 
Dividends on preferred stock   77,250    77,250    154,500    154,500 
Net income (loss) available to common shareholders  $(1,024,825)  $(389,789)  $(953,575)  $771,618 

 

Results of Operations for the Three and Six Months Ended March 31, 2018 Compared to the Three and Six Months Ended March 31, 2017

 

Revenues. Total revenues from continuing operations decreased by $2.3 million or 9.0% to $23.1 million for the three months ended March 31, 2018 from $25.4 million for the same period in 2017. The decrease was primarily attributable to an $4.9 million revenue decrease in petroleum and gas work and a $200,000 decrease in water and sewer projects and other ancillary services, partially offset by a $2.8 million revenue increase in electrical and mechanical services.

 

Total revenues from continuing operations decreased by $7.3 million or 11.5% to $55.6 million for the six months ended March 31, 2018 from $62.9 million for the same period in 2017. The decrease was primarily attributable to an $13.8 million revenue decrease in petroleum and gas work and a $100,000 decrease in water and sewer projects and other ancillary services, partially offset by a $6.6 million revenue increase in electrical and mechanical services.

 

Due to a shortage of qualified labor and the extended schedules on the projects noted in “Major Projects with Losses” below, the Company was not able to secure additional transmission pipeline work in the quarters ended September 30, 2017 and December 31, 2017. This also affected “Cost of Revenues” and “Gross Profit” below. The Company had no revenue from discontinued operations for the three and six months ended March 31, 2018 and 2017.

 

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Cost of Revenues. Total cost of revenues from continuing operations decreased by $1.8 million or 7.6% to $22.0 million for the three months ended March 31, 2018 from $23.9 million for the same period in 2017. The decrease was primarily attributable to a $4.4 million cost decrease in petroleum and gas work, and a $400,000 cost decrease in equipment and tool shop operations not allocated to projects, partially offset by a $2.8 million cost increase in electrical and mechanical services, and a $200,000 cost increase in water and sewer projects and other ancillary services. There was no cost of revenues from discontinued operations for the three months ended March 31, 2018 and 2017.

 

Total cost of revenues from continuing operations decreased by $4.1 million or 7.2% to $52.6 million for the six months ended March 31, 2018 from $56.7 million for the same period in 2017. The decrease was primarily attributable to a $11.0 million cost decrease in petroleum and gas work, and a $100,000 cost decrease in water and sewer projects and other ancillary services, partially offset by a $6.4 million cost increase in electrical and mechanical services, and a $600,000 cost increase in equipment and tool shop operations not allocated to projects. There was no cost of revenues from discontinued operations for the six months ended March 31, 2018 and 2017.

 

Gross Profit. Total gross profit from continuing operations decreased by $400,000 or 30.2% to $1.1 million for the three months ended March 31, 2018, from $1.5 million for the same period in 2017. The decrease was primarily attributable to a $500,000 gross profit decrease in petroleum and gas work, and a $400,000 gross profit decrease in water and sewer projects and other ancillary services, partially offset by a $400,000 gross profit increase related to equipment and tool shop operations costs not allocated to projects, and a $100,000 gross profit increase in electrical and mechanical services. There were no gross profits from discontinued operations for the three months ended March 31, 2018 and 2017.

 

Total gross profit from continuing operations decreased by $3.2 million or 51.1% to $3.0 million for the six months ended March 31, 2018, from $6.2 million for the same period in 2017. The decrease was primarily attributable to a $2.7 million gross profit decrease in petroleum and gas work, a $600,000 gross profit decrease related to equipment and tool shop operations costs not allocated to projects, and a $100,000 gross profit decrease in water and sewer projects and other ancillary services, partially offset by a $200,000 gross profit increase in electrical and mechanical services. There were no gross profits from discontinued operations for the six months ended March 31, 2018 and 2017.

 

Selling and administrative expenses. Total selling and administrative expenses from continuing operations increased by $17,000 or 1.0% to $2.0 million for the three months ended March 31, 2018 from $1.9 million for the same period in 2017. There were no selling and administrative expenses for discontinued operations for the three months ended March 31, 2018 and 2017. The Company believes that any ongoing costs associated with closing discontinued operations will be immaterial.

 

Total selling and administrative expenses from continuing operations decreased by $170,000 or 4.1% to $4.0 million for the six months ended March 31, 2018 from $4.1 million for the same period in 2017. There were no selling and administrative expenses for discontinued operations for the six months ended March 31, 2018 and 2017. The Company believes that any ongoing costs associated with closing discontinued operations will be immaterial.

 

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Interest Expense. Interest expense increased by $100,000 or 69.8% to $244,000 for the three months ended March 31, 2018 from $144,000 for the same period in 2017. This increase was primarily due to interest expense on the Equipment Line of Credit (2017) and Operating Line of Credit (2017).

 

Interest expense increased by $165,000 or 44.1% to $540,000 for the six months ended March 31, 2018 from $375,000 for the same period in 2017. This increase was primarily due to interest expense on the Equipment Line of Credit (2017) and Operating Line of Credit (2017).

 

Net Income (loss). Loss from continuing operations before income taxes was $1.2 million for the three months ended March 31, 2018, compared to $570,000 for the same period in 2017. Loss from continuing operations before taxes was $1.1 million for the six months ended March 31, 2018, compared to an income from continuing operations before income taxes of $1.6 million for the same period in 2017. The decrease was due to the items mentioned above. There was no income from discontinued operations for the three and six months ended March 31, 2018 and 2017.

 

Income tax benefit for the three months ended March 31, 2018 was $224,000 compared to $257,000 for the same period in 2017. Income tax benefit for the six months ended March 31, 2018 was $256,000 compared to income tax expense of $719,000 for the same period in 2017. The decrease in income tax expense was primarily due to the decrease in income from continuing operations before income taxes. The income tax benefit for the six months ended March 31, 2018 was also due to the decrease in the federal corporate income tax rate and a tax benefit generated from adjusting the Company’s deferred tax asset and liability amounts. The effective income tax rate for the six months ended March 31, 2018 was (24.2%), as compared to 43.7% for the same period in 2017. 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.

 

The US Tax Cuts and Jobs Act of 2017 (the “Act”) was enacted in December 2017. As a result, the top corporate income tax rate was reduced from 35% to 21% beginning with tax years after December 31, 2017. As a fiscal year filer, the Act will require the Company to use a “blended” tax rate for fiscal year 2018. Beginning with fiscal year 2019, the Company’s federal tax rate will be 21%. The Company’s deferred tax asset and liability were calculated at the 24.5% rate at March 31, 2018.

 

Accrued dividends on preferred stock for the six months ended March 31, 2018 and 2017 were $154,500.

 

Net loss available to common shareholders for the three months ended March 31, 2018 was $1.0 million, compared to $390,000 for the same period in 2017. Net loss available to common shareholders for the six months ended March 31, 2018 was $954,000 compared to a net income available to common shareholders of $772,000 for the same period in 2017.

 

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Major Projects with Losses

 

The Company had two pipeline projects (“Project A” and “Project B”), both started in April 2017, that recognized an estimated combined loss of $5.0 million at September 30, 2017 and an estimated loss of $290,000 for the six months ended March 31, 2018. The projects were completed during the first quarter of fiscal year 2018 except for final clean up scheduled for Spring 2018. The Company believes the total projected loss has been reflected as of March 31, 2018.

 

Project A had an estimated contract value of $10.3 million to install 19,000 feet of 24” pipe, 3,400 feet of 16” pipe, and 600 feet of 8” pipe. At March 31, 2018, the Company had recognized a $3.3 million loss on this project. Project B had an estimated contract value of $5.1 million to install 14,600 feet of 16” steel pipe. At March 31, 2018, the Company had recognized a $2.0 million loss on this project. Losses on both projects were primarily due to daily production significantly below historical results. The inefficient production was due to a shortage of qualified labor during an extremely busy time in the pipeline industry and more inclement weather than was estimated for the projects. This led to greater labor expense and longer project schedules than was estimated on the projects. A summary of the projects is below:

 

   Earned   Cost of   Gross 
   Revenue   Revenues   Loss 
             
At September 30, 2017               
Project A  $8,429,838   $11,507,538   $(3,077,700)
Project B   5,054,534    6,931,887    (1,877,353)
Total  $13,484,372   $18,439,425   $(4,955,053)
                
Six Months Ended March 31, 2018               
                
Project A  $1,886,499   $2,073,996   $(187,497)
Project B   -    102,548    (102,548)
Total  $1,886,499   $2,176,544   $(290,045)
                
Projects to Date               
Project A  $10,316,337   $13,581,534   $(3,265,197)
Project B   5,054,534    7,034,435    (1,979,901)
Total  $15,370,871   $20,615,969   $(5,245,098)

 

Comparison of Financial Condition at March 31, 2018 and September 30, 2017

 

The Company had total assets of $45.2 million at March 31, 2018, a decrease of $12.1 million from the prior fiscal year end balance of $57.3 million. Accounts receivable, which totaled $12.1 million at March 31, 2018, decreased by $11.0 million from the prior fiscal year end balance of $23.1 million. The decrease was due to projects completing during the quarters ended December 31, 2017 and March 31, 2018 while significant projects will begin during the Company’s third quarter of fiscal year 2018. Retainages receivable totaled $1.4 million at March 31, 2018, a decrease of $2.4 million from the prior fiscal year end balance of $3.8 million. The decrease is due to the completion of projects and billing of retention in the six months ended March 31, 2018. The Company also had net fixed assets of $18.0 million at March 31, 2018, a decrease of $1.2 million from prior fiscal year end balance of $19.2 million. This decrease was due to depreciation of $2.1 million and a net fixed asset disposal of $100,000 after reducing accumulated depreciation, partially offset by equipment acquisitions of $1.0 million. Cash and cash equivalents totaled $2.8 million at March 31, 2018, an increase of $1.1 million from the prior fiscal year end balance of $1.7 million. This increase was primarily due to the decrease in accounts receivable, partially offset by the decrease in accounts payable, short term debt, and accrued expenses and other liabilities. Prepaid expenses and other totaled $5.1 million at March 31, 2018, an increase of $1.0 million from the prior fiscal year end balance of $4.0 million. This increase is primarily due to the financing of the Company’s insurance premiums net of insurance cost accruals. Estimated earnings in excess of billings on uncompleted contracts totaled $5.7 million at March 31, 2018, an increase of $300,000 from the prior fiscal year end balance of $5.4 million. The increase was due to a difference in the timing of project billings at March 31, 2018 compared to September 30, 2017.

 

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The Company had total liabilities of $25.1 million at March 31, 2018, a decrease of $11.1 million from the prior fiscal year end balance of $36.2 million. Lines of credit and short-term borrowings totaled $4.9 million at March 31, 2018, a decrease of $4.5 million from the prior fiscal year end balance of $9.4 million. This decrease is primarily due to $6.5 million in line of credit repayments, partially offset by $2.0 million in short term borrowings related to insurance premiums, net of repayments. Accounts payable and accrued expenses totaled $5.4 million at March 31, 2018, a decrease of $4.4 million from the prior fiscal year end balance of $9.8 million. Long-term debt totaled $7.5 million at March 31, 2018, a decrease of $2.2 million from the prior fiscal year end balance of $9.7 million. The decrease in long-term debt was due to principal repayments on debt. Deferred tax liabilities totaled $130,000 at March 31, 2018, a decrease of $320,000 from the prior fiscal year end balance of $450,000. The decrease was due to the reduction of the federal corporate tax rate as noted above. Current maturities of long-term debt totaled $4.5 million at March 31, 2018, a decrease of $100,000 from the prior fiscal year end balance of $4.6 million. Billings in excess of cost and estimated earnings on uncompleted contracts totaled $2.7 million at March 31, 2018, an increase of $500,000 from the prior year end total of $2.2 million. The increase was due to a difference in the timing of project billings at March 31, 2018 compared to September 30, 2017.

 

Shareholders’ equity was $20.2 million at March 31, 2018, a decrease of $954,000 from the prior fiscal year end balance of $21.1 million. This decrease was due to the net loss available to common shareholders of $954,000 for the six months ended March 31, 2018.

 

Liquidity and Capital Resources

 

Indebtedness

 

On January 31, 2014, the Company entered into a financing arrangement with United Bank, Inc. (West Virginia) and Summit Community Bank (West Virginia). The financing arrangement is a five-year term loan in the amount of $8.8 million and bears interest at an annual rate of 6.50%. In addition, the Company entered into a separate five-year term loan agreement with First Guaranty Bank (Louisiana) for $1.6 million and bears interest at an annual rate of 3.55%. Taken together, the $10.4 million in new financings supersedes the prior financing arrangements the Company had with United Bank as well as the other lenders. As a result of entering into the new financings, United Bank and the other lenders of the Company agreed to terminate their Forbearance Agreement with the Company. This was reported in the Company’s February 4, 2014 Form 8-K filing. The loan is collateralized by the Company’s accounts receivable and equipment.

 

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Under the terms of the financing agreement reached January 31, 2014, the Company must meet the following loan covenants:

 

1.Minimum tangible net worth of $10.0 million to be measured quarterly
2.Minimum traditional debt service coverage of 1.50x to be measured quarterly on a rolling twelve-month basis
3.Minimum current ratio of 1.30x to be measured quarterly
4.Maximum debt to tangible net worth ratio (“TNW”) to be measured semi-annually on the following basis:

 

Date   Debt to TNW
  6/30/2016   1.50x
  Thereafter   1.50x

 

On July 31, 2014, the bank group modified the calculation of the debt service coverage covenant in the loan agreement so that the Company is required to maintain a minimum debt service coverage ratio of no less than 1.50 to 1.0x tested quarterly, as of the end of each fiscal quarter, based upon the preceding four quarters.  Debt service coverage will be defined as the ratio of cash flow (net income plus depreciation, amortization and interest expense, plus or minus one-time/non-recurring income and expenses (determined at the bank group’s sole discretion)) divided by the annualized debt service requirements on the Company’s senior secured term debt (post refinance), actual interest paid on the Company’s senior secured revolving credit facility and the annualized payments on any other debt outstanding.

 

This modification applied as of June 30, 2014, as well as for future periods.  The Company was in compliance with, or obtained a waiver for, all loan covenants at March 31, 2018.

 

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 monthly. The interest rate on this loan agreement is 4.75% with monthly payments of $7,800. The interest rate on this note is subject to change from time to time based on changes in an independent index, The U.S. Treasury yield, adjusted to a constant maturity of three years as published by the Federal Reserve weekly. The loan is collateralized by the building purchased under this agreement.

 

On September 16, 2015, the Company entered into a $1.2 million 41-month term note agreement with United Bank, Inc. to refinance the five-year term note agreement with First Guaranty Bank. The agreement has an interest rate of 5.0% and is subject to the terms of the January 31, 2014 Term Note agreement discussed above. The loan is collateralized by the Company’s accounts receivable and equipment.

 

On September 16, 2015, the Company entered into a $2.5 million Non-Revolving Note agreement with United Bank, Inc. This six-year agreement gave the Company access to a $2.5 million line of credit (“Equipment Line of Credit”), specifically for the purchase of equipment, for the period of one year with an interest rate of 5.0%. After the first year, all borrowings against the Equipment Line of Credit will be converted to a five-year term note agreement with an interest rate of 5.0%. This agreement is subject to the terms of the January 31, 2014 Term Note agreement discussed above. At March 31, 2018, the Company had borrowed $2.46 million against this line of credit and made principal payments of $660,000. The loan is collateralized by the equipment purchased under this agreement.

 

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On November 13, 2015, the Company entered into a 10-year $1.1 million loan agreement with United Bank, Inc. to purchase the fabrication shop and property Nitro had previously been leasing for $12,900 each month. The interest rate on the new loan agreement is 4.25% with monthly payments of $11,500. The loan is collateralized by the building and property purchased under this agreement.

 

On June 28, 2017, the Company entered into a $5.0 million Non-Revolving Note agreement with United Bank, Inc. This five-year agreement gave the Company access to a $5.0 million line of credit (“Equipment Line of Credit 2017”), specifically for the purchase of equipment, for a period of three months with an interest rate of 4.99%. After three months, all borrowings against the Equipment Line of Credit 2017 were converted to a five-year term note agreement with an interest rate of 4.99%. As of March 31, 2018, the Company had borrowed $5.0 million against this line of credit and made principal payments of $470,000. The loan is collateralized by the equipment purchased under this agreement.

 

Operating Line of Credit

 

On March 21, 2018, the Company entered into a financing agreement (“Operating Line of Credit (2018)”) with United Bank, Inc. to provide the Company with a $15.0 million revolving line of credit. The interest rate on the line of credit is the “Wall Street Journal” Prime Rate (the index) with a floor of 4.99%. The effective date of this agreement was February 27, 2018 and is a renewal of the $15.0 million revolving line of credit (“Operating Line of Credit (2017)”) entered into with United Bank, Inc. effective February 27, 2017. At March 31, 2018, the balance on this line of credit was $2.6 million. The line of credit is collateralized by the Company’s accounts receivable and equipment.

 

Cash available under the line is calculated based on 70.0% of the Company’s eligible accounts receivable. Major items excluded from the calculation are receivables from bonded jobs and retainage as well as items greater than 90 days old.

 

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 $17.0 million to be measured quarterly
2.Minimum traditional debt service coverage of 1.50x 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 1.50x to be measured semi-annually.

 

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 tangible net worth of $19.0 million to be measured quarterly
2.Minimum traditional debt service coverage of 2.0x to be measured quarterly on a rolling twelve-month basis
3.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.

 

The Company was in compliance with, or obtained a waiver for, all covenants and additional requirements for the $15.0 million Operating Line of Credit (2018) at March 31, 2018.

 

22 

 

 

Off-Balance Sheet Arrangements

 

Due to the nature of our industry, we often enter into certain off-balance sheet arrangements in the ordinary course of business that result in risks not directly reflected in our balance sheets. Though for the most part not material in nature, some of these are:

 

Leases

 

Our work often requires us to lease various equipment, vehicles, and facilities. These leases usually are short-term in nature, with duration of two year or less, though at times we may enter into longer term leases when warranted. By leasing, we are able to reduce our capital outlay requirements for equipment, vehicles and facilities that we may only need for short periods of time. As of March 31, 2018, the Company had operating lease commitments of $73,000 with various expiration dates through March 2020.

 

Letters of Credit

 

Certain of our customers or vendors may require letters of credit to secure payments that the vendors are making on our behalf or to secure payments to subcontractors and vendors on various customer projects. At March 31, 2018, the Company did not have any letters of credit outstanding.

 

Performance Bonds

 

Some customers, particularly new ones or governmental agencies, require the Company to post bid bonds, performance bonds and payment bonds (collectively, performance bonds). These 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 number of contracts that can be bid.

 

Depending upon the size and conditions of a 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 against outstanding performance bonds in the foreseeable future. At March 31, 2018, the Company had $10.3 million in performance bonds outstanding.

 

Concentration of Credit Risk

 

In the ordinary course of business, the Company grants credit under normal payment terms, generally without collateral, to our customers, which include natural gas and oil companies, general contractors, and various commercial and industrial customers located within the United States. 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. Under certain circumstances such as foreclosure, the Company may take title to the underlying assets in lieu of cash in settlement of receivables.

 

23 

 

 

The Company had three customers that exceeded 10.0% of revenues for the six months ended March 31, 2018. The three customers, Toyota Motor Manufacturing, Marathon Petroleum and Dow Chemical, represented 24.3%, 15.6% and 10.4% of revenues, respectively. The Company had one customer, Toyota Motor Manufacturing, which represented 19.9% of receivables net of retention at March 31, 2018. The Company had two customers that exceeded 10.0% of revenues for the six months ended March 31, 2017. These two customers, Marathon Petroleum and EQT, represented 21.5% and 15.4% of revenues, respectively at March 31, 2017. The Company had three customers, Marathon Petroleum, Columbia Gas Transmission and Dow Chemical, which represented 11.0%, 17.0% and 12.0% of receivables net of retention, respectively, at March 31, 2017.

 

The Company’s consolidated operating revenues for the six months ended March 31, 2018 were $55.6 million of which 57.9% was attributable to electrical and mechanical services, 34.2% to gas & petroleum work, and 7.9% to water and sewer installations and other ancillary services. The Company’s consolidated operating revenues for the six months ended March 31, 2017 were $62.9 million of which 52.1% was attributable to gas and petroleum work, 40.8% to electrical and mechanical contract services, and 7.1% to water and sewer installations and other ancillary services.

 

Litigation

 

The Company is a party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract and/or property damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to all such lawsuits, claims, and proceedings, we record reserves when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In February 2018, the Company filed a lawsuit against a former customer related to a dispute over changes on a pipeline construction project. The Company is seeking $6.9 million in the lawsuit, none of which has been recognized in the Company’s financial statements. At March 31, 2018, the Company does not believe that any of these proceedings, separately or in aggregate, would be expected to have a material adverse effect on our financial position, results of operations or cash flows.

 

Related Party Transactions

 

We intend that all transactions between us 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. Mr. Douglas Reynolds, President of Energy Services, is a director and secretary of First Bank of Charleston. Mr. Nester Logan and Mr. Samuel Kapourales, directors of Energy Services, are also directors of First Bank of Charleston. The interest rate on the new loan agreement is 4.75% with monthly payments of $7,800. As of March 31, 2018, we have paid approximately $95,000 in principal and approximately $140,000 in interest since the beginning of the loan.

 

There were no new material related party transactions during the six months ended March 31, 2018.

 

24 

 

 

Inflation

 

Due to relatively low levels of inflation during the six months ended March 31, 2018 and 2017, inflation did not have a significant effect on our results.

 

New Accounting Pronouncements

 

In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 for all entities by one year. In June 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (“ASU 2014-09”).  ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance, and creates a Topic 606 Revenue from Contracts with Customers. With the amendments in ASU 2015-14, ASU 2014-09 will be effective for the Company beginning after December 15, 2017, including interim periods. In September 2017, the FASB issued ASU 2017-13 which amends the early adoption date option for certain companies related to the adoption of ASU 2014-09. The Company expects that the adoption of ASU 2014-09 will not have a material impact on its financial statements or disclosure.

 

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. ASU 2016-02 is effective for public business entities for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years. Among other things, lessees will be required to recognize the following for all leases (except for short-term leases) at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The Company expects that the adoption of ASU 2016-02 will not have a material impact on its financial statements or disclosure.

 

In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers”. The effective date of ASU 2016-20 is the same date that Topic 606 is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein. The amendments in ASU 2016-20 affect narrow aspects of the guidance issued in ASU 2014-09 including Loan Guarantee Fees, Contract Costs, Provisions for Losses on Construction-Type and Production-Type Contracts, Disclosure of Remaining Performance Obligations, Disclosure of Prior Period Performance Obligations, Contract Modifications, Contract Asset vs. Receivable, Refund Liability, and Advertising Costs. The Company expects that the adoption of ASU 2016-20 will not have a material impact on its financial statements or disclosure.

 

On March 13, 2018, the Financial Accounting Standards Board issued ASU 2018-05, ”Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118”.  These amendments to the Accounting Standards Codification add the guidance, among other things, to the FASB Accounting Standards Codification regarding the Tax Cuts and Jobs Act (the Act) under the Securities and Exchange Commission’s Staff Accounting Bulletin No. 118 to address situations where the accounting under Topic 740 was previously incomplete for certain income tax effects of the Act upon issuance of an entity’s financial statements for the reporting period in which the Act was enacted.  The amendments of ASU 2018-05 were effective immediately upon issuance and did not have a material impact on the Company’s financial statements or disclosure.

 

25 

 

 

Critical Accounting Policies

 

The discussion and analysis of the Company’s financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities known to exist at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. We evaluate our estimates on an ongoing basis, based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. There can be no assurance that actual results will not differ from those estimates. Management believes the following accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

 

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 have a high probability of success. Revenue from a claim is recorded only to the extent that contract costs relating to the claim have been incurred.

 

Revenue Recognition. Revenues from fixed price contracts are recognized using the percentage-of-completion method, measured by the percentage of costs incurred to date of total estimated costs at completion. These contracts provide for a fixed amount of revenues for the entire project. Such contracts provide that the customer accept completion of progress to date and compensate us for services rendered, measured in terms of units installed, hours expended or some other measure of progress. Contract costs include all direct material, labor and subcontract costs and indirect costs related to contract performance, such as indirect labor, tools and expendables. The cost estimates are based on the professional knowledge and experience of the Company’s engineers, project managers and financial professionals. Changes in job performance and job conditions affect the total estimated costs at completion. The effects of these changes are recognized in the period in which they occur. Provisions for the total estimated losses on uncompleted contracts are made in the period in which such losses are determined. The current asset “Costs and estimated earnings in excess of billings on uncompleted contracts” represents revenues recognized in excess of amounts billed for fixed price contracts. The current liability “Billings in excess of costs and estimated earnings on uncompleted contracts” represents billings in excess of revenues recognized for fixed price contracts. Revenues on all costs plus and time and material contracts are recognized when services are performed or when units are completed.

 

Self-Insurance. The Company carries workers’ compensation, general liability and automobile insurance through a captive insurance company. While the Company believes that this arrangement has been beneficial in reducing and stabilizing insurance costs, the Company does have to maintain a restricted cash account to guarantee payments of premiums. That restricted account had a balance of $2.1 million as of March 31, 2018 and is classified as “Prepaid expenses and other” on the Company’s Consolidated Balance Sheets. Should the Company experience severe losses over an extended period, it could have a detrimental effect on the Company, notwithstanding the captive insurance company.

 

26 

 

 

Accounts Receivable and Provision for Doubtful Accounts. The Company provides an allowance for doubtful accounts when collection of an account is considered doubtful. Inherent in the assessment of the allowance for doubtful accounts are certain judgments and estimates relating to factors such as a customer’s access to capital, the customer’s willingness or ability to pay, general economic conditions and the ongoing relationship with the customer. While most of our customers are large well capitalized companies, should they experience material changes in their revenues and cash flows or incur other difficulties and become unable to pay the amounts owed, this could cause reduced cash flows and losses in excess of our current reserves. At March 31, 2018, management concluded that the allowance for doubtful accounts was adequate.

 

Outlook

 

The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially.

 

The Company prepares weekly cash forecasts for our own benefit and for submission to our lenders. We anticipate that our current cash and the cash to be generated from collection of our receivables along with the existing Operating Line of Credit (2018) with United Bank, Inc. will be adequate to meet our cash needs for the Company’s 2018 fiscal year. The Company may borrow against the line of credit provided it meets certain borrowing base requirements, with $15.0 million being the maximum allowed. If the Company has borrowed more than the borrowing base allows, the Company must repay the excess borrowings to United Bank, Inc. As of March 31, 2018, the Company had borrowings of $2.6 million against the Operating Line of Credit (2018).

 

Currently, the Company is receiving bid opportunities from existing and potential new customers. However, with potential economic uncertainties the demand for our customers’ projects could wane and their ability to fund planned projects could be reduced. Also, a shortage of qualified labor could lead to inefficient production and could make bidding and managing projects more difficult. The Company’s backlog at March 31, 2018 was $55.1 million. Additionally, the Company received a $47.0 million award on a transmission pipeline project in April 2018. While adding additional projects appears likely, no assurances can be given that the Company will be successful in bidding on projects that become available. Moreover, even if the Company obtains contracts, there can be no guarantee that the projects will go forward.

 

ITEM 3. Quantitative and Quantitative Disclosures About Market Risk

 

Not required for a smaller reporting company.

 

ITEM 4. Controls and Procedures

 

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we 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 of America Corporation files or submits under the Securities Exchange Act of 1934, is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

27 

 

 

There has been no change in Energy Services of America Corporation’s internal control over financial reporting during Energy Services of America Corporation’s second quarter of fiscal year 2018 that has materially affected, or is reasonably likely to materially affect, Energy Services of America Corporation’s internal control over financial reporting.

 

PART II

 

OTHER INFORMATION

 

ITEM 1. Legal Proceedings

 

The Company is a party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract and/or property damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to all such lawsuits, claims, and proceedings, we record reserves when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. In February 2018, the Company filed a lawsuit against a former customer related to a dispute over changes on a pipeline construction project. The Company is seeking $6.9 million in the lawsuit, none of which has been recognized in the Company’s financial statements. At March 31, 2018, we do not believe that any of these proceedings, separately or in aggregate, would be expected to have a material adverse effect on our financial position, results of operations or cash flows.

 

ITEM 1A. Risk Factors

 

Please see the information disclosed in the “Risk Factors” section of our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on December 15, 2017. There have been no material changes to the risk factors since the filing of the Annual Report on Form 10-K.

 

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

(a) There have been no unregistered sales of equity securities during the period covered by the report.

 

(b) None.

 

(c) Energy Services of America Corporation did not repurchase any shares of its common stock during the six months ended March 31, 2018.

 

28 

 

 

ITEM 6. Exhibits

 

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

 

29 

 

 

SIGNATURES

 

Pursuant to the requirements 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: May 14, 2018   By: /s/ Douglas V. Reynolds
      Douglas V. Reynolds
      Chief Executive Officer
       
Date: May 14, 2018   By: /s/ Charles P. Crimmel
      Charles P. Crimmel
      Chief Financial Officer

 

30 

 

EX-31.1 2 tv493688_ex31-1.htm EXHIBIT 31.1

 

Exhibit 31.1

 

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Douglas V. Reynolds, certify that:

 

1.I have reviewed this Quarterly Report on Form 10-Q of Energy Services of America Corporation;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 14, 2018 /s/ Douglas V. Reynolds
  Douglas V. Reynolds
  Chief Executive Officer

 

 

 

EX-31.2 3 tv493688_ex31-2.htm EXHIBIT 31.2

 

Exhibit 31.2

 

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Charles P. Crimmel, certify that:

 

1.I have reviewed this Quarterly Report on Form 10-Q of Energy Services of America Corporation;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

 

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 14, 2018 /s/ Charles P. Crimmel
  Charles P. Crimmel
  Chief Financial Officer

 

 

 

EX-32 4 tv493688_ex32.htm EXHIBIT 32

 

Exhibit 32

 

Certification pursuant to

18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

 

Douglas V. Reynolds, Chief Executive Officer and Charles P. Crimmel, Chief Financial Officer of Energy Services of America Corporation (the “Company”) each certify in their capacity as officers of the Company that they have reviewed this Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, and that to the best of their knowledge:

 

1.the report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

 

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date:  May 14, 2018 /s/ Douglas V. Reynolds
  Douglas V. Reynolds
  Chief Executive Officer
   
Date:  May 14, 2018 /s/ Charles P. Crimmel
  Charles P. Crimmel
  Chief Financial Officer

 

 

 

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Document and Entity Information - shares
6 Months Ended
Mar. 31, 2018
May 01, 2018
Document and Entity Information [Abstract]    
Entity Registrant Name Energy Services of America CORP  
Entity Central Index Key 0001357971  
Trading Symbol esoa  
Current Fiscal Year End Date --09-30  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   14,239,836
Document Type 10-Q  
Document Period End Date Mar. 31, 2018  
Amendment Flag false  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q2  
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.8.0.1
Consolidated Balance Sheets - USD ($)
Mar. 31, 2018
Sep. 30, 2017
Current assets    
Cash and cash equivalents $ 2,841,953 $ 1,663,222
Accounts receivable-trade 12,146,234 23,140,272
Allowance for doubtful accounts (108,771) (108,200)
Retainages receivable 1,354,679 3,773,892
Other receivables 98,701 96,242
Costs and estimated earnings in excess of billings on uncompleted contracts 5,697,269 5,350,884
Prepaid expenses and other 5,072,833 4,044,731
Assets of discontinued operations 12,303 12,303
Total current assets 27,115,201 37,973,346
Property, plant and equipment, at cost 47,609,657 48,436,122
less accumulated depreciation (29,616,656) (29,243,614)
Total fixed assets 17,993,001 19,192,508
Long-term notes receivable 137,281 137,281
Total assets 45,245,483 57,303,135
Current liabilities    
Current maturities of long-term debt 4,470,279 4,562,918
Lines of credit and short term borrowings 4,859,188 9,432,968
Accounts payable 2,887,144 5,522,143
Accrued expenses and other current liabilities 2,524,304 4,302,611
Billings in excess of costs and estimated earnings on uncompleted contracts 2,667,983 2,173,965
Liabilities of discontinued operations 28,671 28,671
Total current liabilities 17,437,569 26,023,276
Long-term debt, less current maturities 7,504,712 9,702,483
Deferred income taxes payable 125,958 446,557
Total liabilities 25,068,239 36,172,316
Shareholders' equity    
Preferred stock, $.0001 par value Authorized 1,000,000 shares, 206 issued for March 31, 2018 and September 30, 2017
Common stock, $.0001 par value Authorized 50,000,000 shares 14,839,836 issued and 14,239,836 outstanding for March 31, 2018 shares and September 30, 2017 1,484 1,484
Treasury stock, 600,000 shares at March 31, 2018 and September 30, 2017 (60) (60)
Additional paid in capital 61,289,260 61,289,260
Retained earnings (deficit) (41,113,440) (40,159,865)
Total shareholders' equity 20,177,244 21,130,819
Total liabilities and shareholders' equity $ 45,245,483 $ 57,303,135
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Consolidated Balance Sheets (Parentheticals) - $ / shares
Mar. 31, 2018
Sep. 30, 2017
Statement Of Financial Position [Abstract]    
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Preferred stock, shares authorized 1,000,000 1,000,000
Preferred stock, shares issued 206 206
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, shares authorized 50,000,000 50,000,000
Common stock, shares issued 14,839,836 14,839,836
Common stock, shares outstanding 14,239,836 14,239,836
Treasury stock, shares 600,000 600,000
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Consolidated Statements of Income Unaudited - USD ($)
3 Months Ended 6 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]        
Revenue $ 23,093,033 $ 25,371,605 $ 55,640,636 $ 62,868,477
Cost of revenues 22,036,935 23,859,453 52,609,084 56,671,538
Gross profit 1,056,098 1,512,152 3,031,552 6,196,939
Selling and administrative expenses 1,956,356 1,939,278 3,965,447 4,134,888
Income (loss) from operations (900,258) (427,126) (933,895) 2,062,051
Other income (expense)        
Interest income 61   132,342  
Other nonoperating expense (47,023) (40,231) (102,147) (111,660)
Interest expense (243,708) (143,546) (539,552) (374,515)
Gain on sale of equipment 19,670 41,841 388,375 68,831
Other income (expense), Total (271,000) (141,936) (120,982) (417,344)
Income (loss) before income taxes (1,171,258) (569,062) (1,054,877) 1,644,707
Income tax expense (benefit) (223,683) (256,523) (255,802) 718,589
Net income (loss) (947,575) (312,539) (799,075) 926,118
Dividends on preferred stock 77,250 77,250 154,500 154,500
Net income (loss) available to common shareholders $ (1,024,825) $ (389,789) $ (953,575) $ 771,618
Weighted average shares outstanding-basic (in shares) 14,239,836 14,239,836 14,239,836 14,239,836
Weighted average shares-diluted (in shares) 14,239,836 14,239,836 14,239,836 17,673,169
Earnings (loss) per share from continuing operations available to common shareholders (in dollars per share) $ (0.072) $ (0.027) $ (0.067) $ 0.054
Earnings (loss) per share from continuing operations-diluted available to common shareholders (in dollars per share) (0.072) (0.027) (0.067) 0.044
Earnings (loss) per share available to common shareholders (in dollars per share) (0.072) (0.027) (0.067) 0.054
Earnings (loss) per share-diluted available to common shareholders (in dollars per share) $ (0.072) $ (0.027) $ (0.067) $ 0.044
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Consolidated Statements of Cash Flows Unaudited - USD ($)
6 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash flows from operating activities:    
Net income (loss) $ (799,075) $ 926,118
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation expense 2,114,346 1,406,151
Gain on sale/disposal of equipment (388,375) (68,831)
Provision for deferred taxes (320,599) 92,000
Decrease in contracts receivable 10,994,609 12,487,429
Decrease (increase) in retainage receivable 2,419,213 (560,318)
(Increase) decrease in other receivables (2,459) 6,787
(Increase) decrease in cost and estimated earnings in excess of billings on uncompleted contracts (346,385) 1,630,865
Increase in prepaid expenses (1,028,102) (2,498,964)
Decrease in accounts payable (2,634,999) (1,356,188)
Decrease in accrued expenses (1,778,307) (1,664,100)
Increase (decrease) in billings in excess of cost and estimated earnings on uncompleted contracts 494,018 (606,334)
Decrease in income taxes payable   (890,526)
Net cash provided by operating activities 8,723,885 8,904,089
Cash flows from investing activities:    
Investment in property and equipment (969,804) (3,119,369)
Proceeds from sales of property and equipment 443,340 162,573
Net cash used in investing activities (526,464) (2,956,796)
Cash flows from financing activities:    
Borrowings on lines of credit and short term debt, net of (repayments) (4,573,780) (3,990,175)
Preferred dividends paid (154,500) (154,500)
Principal payments on long term debt (2,290,410) (1,442,848)
Net cash used in financing activities (7,018,690) (5,587,523)
Increase in cash and cash equivalents 1,178,731 359,770
Cash beginning of period 1,675,525 3,828,093
Cash end of period 2,854,256 4,187,863
Supplemental schedule of noncash investing and financing activities:    
Insurance premiums financed 3,130,859 3,524,350
Accrued dividends on preferred stock 154,500 154,500
Cash paid during the year for:    
Interest 539,552 374,515
Income taxes $ 21,357 $ 1,139,306
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Consolidated Statements of Changes in Shareholders' Equity - USD ($)
Common Stock
Additional Paid in Capital
Retained Earnings (deficit)
Treasury Stock
Total
Balance at Sep. 30, 2016 $ 1,484 $ 61,289,260 $ (38,766,992) $ (60) $ 22,523,692
Balance (in shares) at Sep. 30, 2016 14,239,836        
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss)     926,118   926,118
Accrued preferred dividends     (154,500)   (154,500)
Balance at Mar. 31, 2017 $ 1,484 61,289,260 (37,995,374) (60) 23,295,310
Balance (in shares) at Mar. 31, 2017 14,239,836        
Balance at Sep. 30, 2017 $ 1,484 61,289,260 (40,159,865) (60) 21,130,819
Balance (in shares) at Sep. 30, 2017 14,239,836        
Increase (Decrease) in Stockholders' Equity [Roll Forward]          
Net income (loss)     (799,075)   (799,075)
Accrued preferred dividends     (154,500)   (154,500)
Balance at Mar. 31, 2018 $ 1,484 $ 61,289,260 $ (41,113,440) $ (60) $ 20,177,244
Balance (in shares) at Mar. 31, 2018 14,239,836        
XML 17 R7.htm IDEA: XBRL DOCUMENT v3.8.0.1
BUSINESS AND ORGANIZATION
6 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation Of Financial Statements [Abstract]  
BUSINESS AND ORGANIZATION

1. BUSINESS AND ORGANIZATION:

 

Energy Services of America Corporation (“Energy Services” or the “Company”) was formed in 2006 as a special purpose acquisition corporation, or blank check company. On August 15, 2008, Energy Services completed the acquisitions of S.T. Pipeline, Inc. (“S.T. Pipeline”) and C.J. Hughes Construction Company, Inc. (“C.J. Hughes”).

 

Wholly owned subsidiary C.J. Hughes is a general contractor primarily engaged in pipeline construction for utility companies. C.J. Hughes operates primarily in the mid-Atlantic region of the United States. Contractors Rental Corporation (“Contractors Rental”), a wholly owned subsidiary of C.J. Hughes provides union building trade employees for projects managed by C.J. Hughes. Nitro Construction Services, Inc. (“Nitro”), a wholly owned subsidiary of C. J. Hughes, is an electrical and mechanical contractor that provides its services to the power, chemical and automotive industries. Nitro operates primarily in the mid-Atlantic region of the United States. Pinnacle Technical Solutions, Inc. (“Pinnacle”), a wholly owned subsidiary of Nitro, operates as a data storage facility within Nitro’s office building. Pinnacle is supported by Nitro and has no employees of its own. All of the C.J. Hughes, Nitro, and Contractors Rental production personnel are union members of various related construction trade unions and are subject to collective bargaining agreements that expire at varying time intervals. S.T. Pipeline engaged in the construction of natural gas pipelines for utility companies in various states, mostly in the mid-Atlantic area of the country. On May 14, 2013, the Company liquidated the operations of S.T. Pipeline and realized $1.9 million from the sale of assets. The financial position and results of operations of S.T. Pipeline have been presented as discontinued operations in the accompanying financial statements for all presented periods.

 

The Company’s stock is quoted under the symbol “ESOA” on the OTC QB market place operated by the OTC Markets Group.

 

Interim Financial Statements

 

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto for the years ended September 30, 2017 and 2016 included in the Company’s Annual Report on Form 10-K filed with the SEC on December 15, 2017. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the interim financial reporting rules and regulations of the SEC. 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, 2018 are not necessarily indicative of the results to be expected for the full year or any other interim period.

 
 

Principles of Consolidation

 

The consolidated financial statements of Energy Services include the accounts of Energy Services and its wholly owned subsidiary, C.J. Hughes and its subsidiaries, Nitro, Pinnacle, and Contractors Rental. S.T. Pipeline has been shown as discontinued operations for the three and six months ended March 31, 2018 and 2017. All significant intercompany accounts and transactions have been eliminated in the consolidation. Unless the context requires otherwise, references to Energy Services include Energy Services and C.J. Hughes and C.J. Hughes’ subsidiaries.

 

Reclassifications

 

Certain reclassifications have been made in prior years’ financial statements to conform to classifications used in the current year.
XML 18 R8.htm IDEA: XBRL DOCUMENT v3.8.0.1
UNCOMPLETED CONTRACTS
6 Months Ended
Mar. 31, 2018
Contractors [Abstract]  
UNCOMPLETED CONTRACTS

2. UNCOMPLETED CONTRACTS

 

Costs, estimated earnings, and billings on uncompleted contracts as of March 31, 2018 and September 30, 2017 are summarized as follows:

 

    March 31, 2018     September 30, 2017  
             
Costs incurred on uncompleted contracts   $ 122,803,569     $ 143,738,101  
                 
Estimated earnings, net of estimated losses     7,096,048       9,573,781  
      129,899,617       153,311,882  
                 
Less billing to date     126,870,331       150,134,963  
    $ 3,029,286     $ 3,176,919  
                 
Costs and estimated earnings in excess of  billings on uncompleted contracts   $ 5,697,269     $ 5,350,884  
                 
Less billings in excess of costs and estimated earnings on uncompleted contracts     2,667,983       2,173,965  
    $ 3,029,286     $ 3,176,919  

 

Backlog at March 31, 2018 and September 30, 2017 was $55.1 million and $62.5 million, respectively. In April 2018, the company was awarded a transmission pipeline project valued at $47.0 million. This project is not included in the March 31, 2018 backlog.
XML 19 R9.htm IDEA: XBRL DOCUMENT v3.8.0.1
CLAIMS
6 Months Ended
Mar. 31, 2018
Claims [Abstract]  
CLAIMS
3. CLAIMS

 

The Company does not have any claims recorded as of March 31, 2018. Claims receivable is a component of cost and estimated earnings in excess of billing.
XML 20 R10.htm IDEA: XBRL DOCUMENT v3.8.0.1
FAIR VALUE MEASUREMENTS
6 Months Ended
Mar. 31, 2018
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS

4. FAIR VALUE MEASUREMENTS

 

The Fair Value Measurements and Disclosures Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands 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 Measurements Topic of the FASB Accounting Standards Codification 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.

 

As noted above, there is a three-level valuation hierarchy for disclosure of fair value measurements. 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:

 

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 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 to unrelated parties was estimated using a discounted cash flow analysis and a yield rate that was estimated based on the borrowing rates for bank loans with similar terms and maturities. The fair value of the aggregate principal amount of the Company’s fixed-rate debt of $13.2 million at March 31, 2018 was $13.1 million.

  

The Company uses fair value measurements on a non-recurring basis in its assessment of goodwill and long-lived assets held and used. In accordance with its annual impairment test during the quarter ended September 30, 2012, the Company recorded a goodwill impairment charge of $36.9 million, which represented the entire amount of goodwill carried on the Company’s balance sheet. Refer to Note 4, Goodwill and Intangible Assets, of the Company’s Annual Report on Form 10-K for the year ended September 30, 2017 for further information.
XML 21 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
DISCONTINUED OPERATIONS
6 Months Ended
Mar. 31, 2018
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS
5. DISCONTINUED OPERATIONS

 

Due to organizational changes and operating losses incurred in fiscal year 2012, the Company decided to discontinue the operations of its wholly owned subsidiary S.T Pipeline. On May 14, 2013, the Company liquidated the operations of S.T. Pipeline and realized $1.9 million from the sale.

 

The Company did not have income from discontinued operations for the three and six months ended March 31, 2018 and 2017.

 

The following table shows the components of assets and liabilities that are classified as discontinued operations in the Company’s consolidated balance sheets at March 31, 2018 and September 30, 2017.

 

    March 31,     September 30,  
    2018     2017  
             
Cash   $ 12,303     $ 12,303  
Assets of discontinued operations-current     12,303       12,303  
Total assets of discontinued operations     12,303       12,303  
                 
Accrued expenses and other current liabilities     28,671       28,671  
Liabilities of discontinued operations-current     28,671       28,671  
Total liabilities of discontinued operations     28,671       28,671  
                 
Net liabilities   $ (16,368 )   $ (16,368 )

 

The $29,000 in accrued expenses and other current liabilities at March 31, 2018 represents a reserve for any unexpected expenses that may be incurred by the discontinued operation. As of March 31, 2018, the Company had paid all debts known to exist to the unsecured creditors of the discontinued operation.
XML 22 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
EARNINGS PER SHARE
6 Months Ended
Mar. 31, 2018
Earnings Per Share [Abstract]  
EARNINGS PER SHARE

6. EARNINGS PER SHARE

 

The amounts used to compute the earnings per share for the three and six months ended March 31, 2018 and 2017 are summarized below.

 

    Three Months Ended     Three Months Ended     Six Months Ended     Six Months Ended  
    March 31,     March 31,     March 31,     March 31,  
    2018     2017     2018     2017  
                         
Income (loss) from continuing operations   $ (947,575 )   $ (312,539 )   $ (799,075 )   $ 926,118  
                                 
Dividends on preferred stock     77,250       77,250       154,500       154,500  
                                 
Income (loss) available to common shareholders-continuing operations   $ (1,024,825 )   $ (389,789 )   $ (953,575 )   $ 771,618  
                                 
Weighted average shares outstanding     14,239,836       14,239,836       14,239,836       14,239,836  
                                 
Weighted average shares outstanding-diluted     14,239,836       14,239,836       14,239,836       17,673,169  
                                 
Earnings (loss) per share from continuing operations available to common shareholders   $ (0.072 )   $ (0.027 )   $ (0.067 )   $ 0.054  
                                 
Earnings (loss) per share from continuing operations available to common shareholders-diluted   $ (0.072 )   $ (0.027 )   $ (0.067 )   $ 0.044  
                                 
Income from discontinued operations   $ -     $ -     $ -     $ -  
                                 
Weighted average shares outstanding     14,239,836       14,239,836       14,239,836       14,239,836  
                                 
Weighted average shares outstanding-diluted     14,239,836       14,239,836       14,239,836       17,673,169  
                                 
Earnings per share from discontinued operations   $ -     $ -     $ -     $ -  
                                 
Earnings per share from discontinued operations-diluted   $ -     $ -     $ -     $ -  
                                 
Net income (loss)   $ (947,575 )   $ (312,539 )   $ (799,075 )   $ 926,118  
                                 
Dividends on preferred stock     77,250       77,250       154,500       154,500  
                                 
Net income (loss) available to common shareholders   $ (1,024,825 )   $ (389,789 )   $ (953,575 )   $ 771,618  
                                 
Earnings (loss) per share available to common shareholders   $ (0.072 )   $ (0.027 )   $ (0.067 )   $ 0.054  
                                 
Earnings (loss) per share available to common shareholders-diluted   $ (0.072 )   $ (0.027 )   $ (0.067 )   $ 0.044  
XML 23 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
INCOME TAXES
6 Months Ended
Mar. 31, 2018
Income Tax Disclosure [Abstract]  
INCOME TAXES

7. INCOME TAXES

 

The components of income taxes are as follows:

 

    Six months ended March 31,  
    2018     2017  
             
Federal                
Current   $ (152,484 )   $ 534,767  
Deferred     (63,045 )     75,371  
Total     (215,529 )     610,138  
                 
State                
Current     (63,716 )     96,539  
Deferred     23,443       11,912  
Total     (40,273 )     108,451  
                 
Total income tax expense (benefit)   $ (255,802 )   $ 718,589  

 

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

 

    March 31,     September 30,  
    2018     2017  
             
Deferred income tax assets                
                 
Long-term                
Net operating loss carryforward   $ 461,602     $ 180,605  
Other deferred assets     861,284       1,213,461  
Total deferred income tax assets     1,322,886       1,394,066  
                 
Continuing operations     1,322,886       1,394,066  
Total deferred income tax assets     1,322,886       1,394,066  
                 
Deferred income tax liabilities                
                 
Long-term                
Property and equipment   $ 1,471,216     $ 1,857,088  
Other deferred liabilities     (22,372 )     (16,465 )
Total deferred income tax liabilities-LT     1,448,844       1,840,623  
                 
Continuing operations     1,448,844       1,840,623  
Total deferred income tax liabilities-LT     1,448,844       1,840,623  
                 
Net deferred income tax liabilities   $ 125,958     $ 446,557  

 

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.
XML 24 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
SHORT-TERM AND LONG-TERM DEBT
6 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
SHORT-TERM AND LONG-TERM DEBT

8. SHORT-TERM AND LONG-TERM DEBT

 

A summary of short-term and long-term debt as of March 31, 2018 and September 30, 2017 is as follows:

 

    March 31,     September 30,  
    2018     2017  
             
Line of credit payable to bank, monthly interest at 4.99%, final payment due by February 27, 2018.   $ 2,582,199     $ 9,112,572  
Renewal signed on March 21, 2018 to extend until February 27, 2019.                
                 
Notes payable to finance companies, due in monthly installments  totaling $63,673 including interest ranging from 1.0% to 10.09%, final payments due through April 2018 to June 2019, secured by equipment.     1,659,466       2,042,524  
                 
Note payable to finance company for insurance premiums financed, due in monthly installments  totaling $288,581 in 2018 and $320,396 in 2017, including interest rate at 2.77%, final payment due October 2018.     2,276,989       320,396  
                 
Notes payable to bank, due in monthly installments totaling  $7,799, including interest at 4.75%, final  payment due November 2034 secured by  building and property.     1,074,469       1,094,631  
                 
Notes payable to bank, due in monthly installments totaling  $11,506, including interest at 5.0%, final  payment due November 2025 secured by  building and property.     900,545       949,481  
                 
Notes payable to bank, due in monthly installments totaling  $172,473, including interest at 6.5%, final  payment due February 2019 secured by  equipment.     1,694,649       2,655,515  
                 
Notes payable to bank, due in monthly installments totaling  $30,914, including interest at 5.0%, final  payment due February 2019 secured by  equipment.     332,961       507,507  
                 
Notes payable to bank, due in monthly installments totaling  $94,333, including interest at 4.99%, final  payment due September 2022 secured by  equipment.     4,527,648       5,000,000  
                 
Notes payable to bank, due in monthly installments totaling  $46,405, including interest at 5.00%, final  payment due September 2021 secured by  equipment.     1,785,253       2,015,743  
                 
Total debt     16,834,179       23,698,369  
                 
Less current maturities     9,329,467       13,995,886  
                 
Total long term debt   $ 7,504,712     $ 9,702,483  
XML 25 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
ACCOUNTING POLICIES (Policies)
6 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Interim Financial Statements

Interim Financial Statements

 

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto for the years ended September 30, 2017 and 2016 included in the Company’s Annual Report on Form 10-K filed with the SEC on December 15, 2017. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to the interim financial reporting rules and regulations of the SEC. 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, 2018 are not necessarily indicative of the results to be expected for the full year or any other interim period.
Principles of Consolidation

Principles of Consolidation

 

The consolidated financial statements of Energy Services include the accounts of Energy Services and its wholly owned subsidiary, C.J. Hughes and its subsidiaries, Nitro, Pinnacle, and Contractors Rental. S.T. Pipeline has been shown as discontinued operations for the three and six months ended March 31, 2018 and 2017. All significant intercompany accounts and transactions have been eliminated in the consolidation. Unless the context requires otherwise, references to Energy Services include Energy Services and C.J. Hughes and C.J. Hughes’ subsidiaries.
Reclassifications
 Reclassifications

 

Certain reclassifications have been made in prior years’ financial statements to conform to classifications used in the current year.
XML 26 R16.htm IDEA: XBRL DOCUMENT v3.8.0.1
UNCOMPLETED CONTRACTS (Tables)
6 Months Ended
Mar. 31, 2018
Contractors [Abstract]  
Schedule of costs, estimated earnings and billings on uncompleted contracts
    March 31, 2018     September 30, 2017  
             
Costs incurred on uncompleted contracts   $ 122,803,569     $ 143,738,101  
                 
Estimated earnings, net of estimated losses     7,096,048       9,573,781  
      129,899,617       153,311,882  
                 
Less billing to date     126,870,331       150,134,963  
    $ 3,029,286     $ 3,176,919  
                 
Costs and estimated earnings in excess of  billings on uncompleted contracts   $ 5,697,269     $ 5,350,884  
                 
Less billings in excess of costs and estimated earnings on uncompleted contracts     2,667,983       2,173,965  
    $ 3,029,286     $ 3,176,919  
XML 27 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
DISCONTINUED OPERATIONS (Tables)
6 Months Ended
Mar. 31, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of the components of asset and liabilities that are classified as discontinued operations
    March 31,     September 30,  
    2018     2017  
             
Cash   $ 12,303     $ 12,303  
Assets of discontinued operations-current     12,303       12,303  
Total assets of discontinued operations     12,303       12,303  
                 
Accrued expenses and other current liabilities     28,671       28,671  
Liabilities of discontinued operations-current     28,671       28,671  
Total liabilities of discontinued operations     28,671       28,671  
                 
Net liabilities   $ (16,368 )   $ (16,368 )
XML 28 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
EARNINGS PER SHARE (Tables)
6 Months Ended
Mar. 31, 2018
Earnings Per Share [Abstract]  
Schedule to compute earnings per share
    Three Months Ended     Three Months Ended     Six Months Ended     Six Months Ended  
    March 31,     March 31,     March 31,     March 31,  
    2018     2017     2018     2017  
                         
Income (loss) from continuing operations   $ (947,575 )   $ (312,539 )   $ (799,075 )   $ 926,118  
                                 
Dividends on preferred stock     77,250       77,250       154,500       154,500  
                                 
Income (loss) available to common shareholders-continuing operations   $ (1,024,825 )   $ (389,789 )   $ (953,575 )   $ 771,618  
                                 
Weighted average shares outstanding     14,239,836       14,239,836       14,239,836       14,239,836  
                                 
Weighted average shares outstanding-diluted     14,239,836       14,239,836       14,239,836       17,673,169  
                                 
Earnings (loss) per share from continuing operations available to common shareholders   $ (0.072 )   $ (0.027 )   $ (0.067 )   $ 0.054  
                                 
Earnings (loss) per share from continuing operations available to common shareholders-diluted   $ (0.072 )   $ (0.027 )   $ (0.067 )   $ 0.044  
                                 
Income from discontinued operations   $ -     $ -     $ -     $ -  
                                 
Weighted average shares outstanding     14,239,836       14,239,836       14,239,836       14,239,836  
                                 
Weighted average shares outstanding-diluted     14,239,836       14,239,836       14,239,836       17,673,169  
                                 
Earnings per share from discontinued operations   $ -     $ -     $ -     $ -  
                                 
Earnings per share from discontinued operations-diluted   $ -     $ -     $ -     $ -  
                                 
Net income (loss)   $ (947,575 )   $ (312,539 )   $ (799,075 )   $ 926,118  
                                 
Dividends on preferred stock     77,250       77,250       154,500       154,500  
                                 
Net income (loss) available to common shareholders   $ (1,024,825 )   $ (389,789 )   $ (953,575 )   $ 771,618  
                                 
Earnings (loss) per share available to common shareholders   $ (0.072 )   $ (0.027 )   $ (0.067 )   $ 0.054  
                                 
Earnings (loss) per share available to common shareholders-diluted   $ (0.072 )   $ (0.027 )   $ (0.067 )   $ 0.044  
XML 29 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
INCOME TAXES (Tables)
6 Months Ended
Mar. 31, 2018
Income Tax Disclosure [Abstract]  
Schedule of components of income taxes
    Six months ended March 31,  
    2018     2017  
             
Federal                
Current   $ (152,484 )   $ 534,767  
Deferred     (63,045 )     75,371  
Total     (215,529 )     610,138  
                 
State                
Current     (63,716 )     96,539  
Deferred     23,443       11,912  
Total     (40,273 )     108,451  
                 
Total income tax expense (benefit)   $ (255,802 )   $ 718,589  
Schedule of income tax effects to deferred tax assets and liabilities
    March 31,     September 30,  
    2018     2017  
             
Deferred income tax assets                
                 
Long-term                
Net operating loss carryforward   $ 461,602     $ 180,605  
Other deferred assets     861,284       1,213,461  
Total deferred income tax assets     1,322,886       1,394,066  
                 
Continuing operations     1,322,886       1,394,066  
Total deferred income tax assets     1,322,886       1,394,066  
                 
Deferred income tax liabilities                
                 
Long-term                
Property and equipment   $ 1,471,216     $ 1,857,088  
Other deferred liabilities     (22,372 )     (16,465 )
Total deferred income tax liabilities-LT     1,448,844       1,840,623  
                 
Continuing operations     1,448,844       1,840,623  
Total deferred income tax liabilities-LT     1,448,844       1,840,623  
                 
Net deferred income tax liabilities   $ 125,958     $ 446,557  
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
SHORT-TERM AND LONG-TERM DEBT (Tables)
6 Months Ended
Mar. 31, 2018
Debt Disclosure [Abstract]  
Schedule of summary of short-term and long-term debt
    March 31,     September 30,  
    2018     2017  
             
Line of credit payable to bank, monthly interest at 4.99%, final payment due by February 27, 2018.   $ 2,582,199     $ 9,112,572  
Renewal signed on March 21, 2018 to extend until February 27, 2019.                
                 
Notes payable to finance companies, due in monthly installments  totaling $63,673 including interest ranging from 1.0% to 10.09%, final payments due through April 2018 to June 2019, secured by equipment.     1,659,466       2,042,524  
                 
Note payable to finance company for insurance premiums financed, due in monthly installments  totaling $288,581 in 2018 and $320,396 in 2017, including interest rate at 2.77%, final payment due October 2018.     2,276,989       320,396  
                 
Notes payable to bank, due in monthly installments totaling  $7,799, including interest at 4.75%, final  payment due November 2034 secured by  building and property.     1,074,469       1,094,631  
                 
Notes payable to bank, due in monthly installments totaling  $11,506, including interest at 5.0%, final  payment due November 2025 secured by  building and property.     900,545       949,481  
                 
Notes payable to bank, due in monthly installments totaling  $172,473, including interest at 6.5%, final  payment due February 2019 secured by  equipment.     1,694,649       2,655,515  
                 
Notes payable to bank, due in monthly installments totaling  $30,914, including interest at 5.0%, final  payment due February 2019 secured by  equipment.     332,961       507,507  
                 
Notes payable to bank, due in monthly installments totaling  $94,333, including interest at 4.99%, final  payment due September 2022 secured by  equipment.     4,527,648       5,000,000  
                 
Notes payable to bank, due in monthly installments totaling  $46,405, including interest at 5.00%, final  payment due September 2021 secured by  equipment.     1,785,253       2,015,743  
                 
Total debt     16,834,179       23,698,369  
                 
Less current maturities     9,329,467       13,995,886  
                 
Total long term debt   $ 7,504,712     $ 9,702,483  
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
BUSINESS AND ORGANIZATION (Detail Textuals)
$ in Millions
May 14, 2013
USD ($)
S.T. Pipeline, Inc | Discontinued Operations  
Disposal Groups, Including Discontinued Operations [Line Items]  
Amount received from sale of assets of subsidiary $ 1.9
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
UNCOMPLETED CONTRACTS - Summary of costs, estimated earnings, and billings on uncompleted contracts (Details) - USD ($)
Mar. 31, 2018
Sep. 30, 2017
Contractors [Abstract]    
Costs incurred on uncompleted contracts $ 122,803,569 $ 143,738,101
Estimated earnings, net of estimated losses 7,096,048 9,573,781
Costs of uncompleted contracts including net estimated earnings 129,899,617 153,311,882
Less billing to date 126,870,331 150,134,963
Unbilled contracts receivable 3,029,286 3,176,919
Costs and estimated earnings in excess of billings on uncompleted contracts 5,697,269 5,350,884
Less billings in excess of costs and estimated earnings on uncompleted contracts 2,667,983 2,173,965
Unbilled contracts receivable $ 3,029,286 $ 3,176,919
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.8.0.1
UNCOMPLETED CONTRACTS (Detail Textuals) - USD ($)
$ in Millions
Apr. 30, 2018
Mar. 31, 2018
Sep. 30, 2017
Uncompleted Contracts [Line Items]      
Backlog   $ 55.1 $ 62.5
Subsequent event      
Uncompleted Contracts [Line Items]      
Transmission pipeline project amount $ 47.0    
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
FAIR VALUE MEASUREMENTS (Detail Textuals) - USD ($)
$ in Millions
1 Months Ended
Sep. 30, 2012
Mar. 31, 2018
Fair Value Disclosures [Abstract]    
Aggregate principal amount of fixed-rate debt   $ 13.2
Fair value of fixed rate debt   $ 13.1
Goodwill impairment charge $ 36.9  
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
DISCONTINUED OPERATIONS - Components of asset and liabilities classified as discontinued operations (Details) - USD ($)
Mar. 31, 2018
Sep. 30, 2017
Components of assets and liabilities classified as discontinued operations:    
Assets of discontinued operations-current $ 12,303 $ 12,303
Accrued expenses and other current liabilities 29,000  
Liabilities of discontinued operations-current 28,671 28,671
S.T. Pipeline, Inc | Discontinued Operations    
Components of assets and liabilities classified as discontinued operations:    
Cash 12,303 12,303
Assets of discontinued operations-current 12,303 12,303
Total assets of discontinued operations 12,303 12,303
Accrued expenses and other current liabilities 28,671 28,671
Liabilities of discontinued operations-current 28,671 28,671
Total liabilities of discontinued operations 28,671 28,671
Net liabilities $ (16,368) $ (16,368)
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.8.0.1
DISCONTINUED OPERATIONS (Detail Textuals) - USD ($)
May 14, 2013
Mar. 31, 2018
Sep. 30, 2017
Disposal Groups, Including Discontinued Operations [Line Items]      
Accrued expenses and other current liabilities   $ 29,000  
S.T. Pipeline, Inc | Discontinued Operations      
Disposal Groups, Including Discontinued Operations [Line Items]      
Gain on sale of discontinued operations $ 1,900,000    
Accrued expenses and other current liabilities   $ 28,671 $ 28,671
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.8.0.1
EARNINGS (LOSS) PER SHARE - Summary of amounts used to compute earnings per share (Details ) - USD ($)
3 Months Ended 6 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Mar. 31, 2018
Mar. 31, 2017
Earnings Per Share [Abstract]        
Income (loss) from continuing operations $ (947,575) $ (312,539) $ (799,075) $ 926,118
Dividends on preferred stock 77,250 77,250 154,500 154,500
Income (loss) available to common shareholders-continuing operations $ (1,024,825) $ (389,789) $ (953,575) $ 771,618
Weighted average shares outstanding (in shares) 14,239,836 14,239,836 14,239,836 14,239,836
Weighted average shares outstanding-diluted (in shares) 14,239,836 14,239,836 14,239,836 17,673,169
Earnings (loss) per share from continuing operations available to common shareholders (in dollars per share) $ (0.072) $ (0.027) $ (0.067) $ 0.054
Earnings (loss) per share from continuing operations available to common shareholders-diluted (in dollars per share) $ (0.072) $ (0.027) $ (0.067) $ 0.044
Income from discontinued operations $ 0 $ 0 $ 0 $ 0
Weighted average shares outstanding (in shares) 14,239,836 14,239,836 14,239,836 14,239,836
Weighted average shares outstanding-diluted (in shares) 14,239,836 14,239,836 14,239,836 17,673,169
Earnings per share from discontinued operations (in dollars per share) $ 0 $ 0 $ 0 $ 0
Earnings per share from discontinued operations-diluted (in dollars per share) $ 0 $ 0 $ 0 $ 0
Net income (loss) $ (947,575) $ (312,539) $ (799,075) $ 926,118
Dividends on preferred stock 77,250 77,250 154,500 154,500
Net income (loss) available to common shareholders $ (1,024,825) $ (389,789) $ (953,575) $ 771,618
Earnings (loss) per share available to common shareholders (in dollars per share) $ (0.072) $ (0.027) $ (0.067) $ 0.054
Earnings (loss) per share available to common shareholders-diluted (in dollars per share) $ (0.072) $ (0.027) $ (0.067) $ 0.044
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.8.0.1
INCOME TAXES - Components of income taxes (Details) - USD ($)
6 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Federal    
Current $ (152,484) $ 534,767
Deferred (63,045) 75,371
Total (215,529) 610,138
State    
Current (63,716) 96,539
Deferred 23,443 11,912
Total (40,273) 108,451
Total income tax expense (benefit) $ (255,802) $ 718,589
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.8.0.1
INCOME TAXES - Summary of income tax effects of temporary differences giving rise to deferred tax liabilities (Details 1) - USD ($)
Mar. 31, 2018
Sep. 30, 2017
Deferred income tax assets Long-term    
Net operating loss carryforward $ 461,602 $ 180,605
Other deferred assets 861,284 1,213,461
Total deferred income tax assets 1,322,886 1,394,066
Deferred income tax liabilities, Long-term    
Property and equipment 1,471,216 1,857,088
Other deferred liabilities (22,372) (16,465)
Total deferred income tax liabilities-LT 1,448,844 1,840,623
Net deferred income tax liabilities 125,958 446,557
Continuing Operations    
Deferred income tax assets Long-term    
Total deferred income tax assets 1,322,886 1,394,066
Deferred income tax liabilities, Long-term    
Total deferred income tax liabilities-LT $ 1,448,844 $ 1,840,623
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.8.0.1
SHORT-TERM AND LONG-TERM DEBT - Summary of short-term and long-term debt (Details) - USD ($)
Mar. 31, 2018
Sep. 30, 2017
Debt Instrument [Line Items]    
Total debt $ 16,834,179 $ 23,698,369
Less current maturities 9,329,467 13,995,886
Total long term debt 7,504,712 9,702,483
Line of credit payable to bank due by February 27, 2018    
Debt Instrument [Line Items]    
Total debt 2,582,199 9,112,572
Notes payable to finance companies, final payments due April 2018 to June 2019    
Debt Instrument [Line Items]    
Total debt 1,659,466 2,042,524
Note payable to finance company for insurance premiums financed, due October 2018 in monthly installments    
Debt Instrument [Line Items]    
Total debt 2,276,989 320,396
Notes payable to bank, final payment due November 2034    
Debt Instrument [Line Items]    
Total debt 1,074,469 1,094,631
Notes payable to bank, final payment due November 2025    
Debt Instrument [Line Items]    
Total debt 900,545 949,481
Notes payable to bank, final payment due February 2019    
Debt Instrument [Line Items]    
Total debt 1,694,649 2,655,515
Notes payable to bank, final payment due February 2019    
Debt Instrument [Line Items]    
Total debt 332,961 507,507
Notes payable to bank, final payment due September 2022    
Debt Instrument [Line Items]    
Total debt 4,527,648 5,000,000
Notes payable to bank, final payment due September 2021    
Debt Instrument [Line Items]    
Total debt $ 1,785,253 $ 2,015,743
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.8.0.1
SHORT-TERM AND LONG-TERM DEBT - Summary of short-term and long-term debt (Parentheticals) (Details) - USD ($)
6 Months Ended 12 Months Ended
Mar. 31, 2018
Sep. 30, 2017
Line of credit payable to bank due by February 27, 2018    
Debt Instrument [Line Items]    
Interest rate 4.99%  
Notes payable to finance companies, final payments due April 2018 to June 2019    
Debt Instrument [Line Items]    
Note payable in monthly installments $ 63,673  
Notes payable to finance companies, final payments due April 2018 to June 2019 | Minimum    
Debt Instrument [Line Items]    
Interest rate 1.00%  
Notes payable to finance companies, final payments due April 2018 to June 2019 | Maximum    
Debt Instrument [Line Items]    
Interest rate 10.09%  
Note payable to finance company for insurance premiums financed, due October 2018 in monthly installments    
Debt Instrument [Line Items]    
Note payable in monthly installments $ 288,581 $ 320,396
Interest rate 2.77%  
Notes payable to bank, final payment due November 2034    
Debt Instrument [Line Items]    
Note payable in monthly installments $ 7,799  
Interest rate 4.75%  
Notes payable to bank, final payment due November 2025    
Debt Instrument [Line Items]    
Note payable in monthly installments $ 11,506  
Interest rate 5.00%  
Notes payable to bank, final payment due February 2019    
Debt Instrument [Line Items]    
Note payable in monthly installments $ 172,473  
Interest rate 6.50%  
Notes payable to bank, final payment due February 2019    
Debt Instrument [Line Items]    
Note payable in monthly installments $ 30,914  
Interest rate 5.00%  
Notes payable to bank, final payment due September 2022    
Debt Instrument [Line Items]    
Note payable in monthly installments $ 94,333  
Interest rate 4.99%  
Notes payable to bank, final payment due September 2021    
Debt Instrument [Line Items]    
Note payable in monthly installments $ 46,405  
Interest rate 5.00%  
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