10-Q 1 tv521326_10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2019

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 3^rd 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 every Interactive Data File required to be submitted 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	x	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 2, 2019, there were 13,981,475 outstanding shares of the Registrant’s Common Stock.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Ticker symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 Par Value	ESOA	OTC QB

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	17

Item 3. Quantitative and Qualitative Disclosures About Market Risk	30

Item 4. Controls and Procedures	30

Part II: Other Information

Item 1. Legal Proceedings	31

Item 1A. Risk Factors	31

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 6. Exhibits	32

Signatures	33

Part 1. Financial Information

Item 1. Financial Statements (Unaudited):

Energy Services of America Corporation

Consolidated Balance Sheets

	March 31,			September 30,
	2019			2018
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	2,766,461		$	1,065,550
Accounts receivable-trade		18,438,234			22,227,555
Allowance for doubtful accounts		(83,885	)		(83,885	)
Retainages receivable		4,703,085			4,919,351
Other receivables		46,619			266,179
Contract assets		13,521,588			5,353,375
Prepaid expenses and other		5,125,686			4,117,276
Total current assets		44,517,788			37,865,401

Property, plant and equipment, at cost		49,301,428			48,278,427
less accumulated depreciation		(32,972,790	)		(31,462,438	)
Total fixed assets		16,328,638			16,815,989

Total assets	$	60,846,426		$	54,681,390

Liabilities and shareholders' equity
Current liabilities
Current maturities of long-term debt	$	2,386,883		$	3,221,268
Lines of credit and short term borrowings		12,102,841			6,069,247
Accounts payable		8,684,544			6,204,870
Accrued expenses and other current liabilities		6,339,278			4,301,515
Contract liabilities		2,525,081			3,261,201
Income tax payable		-			545,237
Total current liabilities		32,038,627			23,603,338

Long-term debt, less current maturities		5,257,421			6,468,630
Deferred income taxes payable		1,121,474			1,328,375
Total liabilities		38,417,522			31,400,343

Shareholders' equity

Preferred stock, $.0001 par value Authorized 1,000,000 shares, 206 issued at March 31, 2019 and September 30, 2018		-			-

Common stock, $.0001 par value Authorized 50,000,000 shares 14,839,836 issued and 14,023,188 outstanding at March 31, 2019 and 14,839,836 issued and 14,194,517 outstanding at September 30, 2018		1,484			1,484

Treasury stock, 816,648 shares at March 31, 2019 and 645,319 at September 30, 2018		(82	)		(65	)

Additional paid in capital		61,034,918			61,239,470
Retained earnings (deficit)		(38,607,416	)		(37,959,842	)
Total shareholders' equity		22,428,904			23,281,047

Total liabilities and shareholders' equity	$	60,846,426		$	54,681,390

The Accompanying Notes are an Integral Part of These Financial Statements

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,
	2019			2018			2019			2018

Revenue	$	46,955,444		$	23,093,033		$	96,069,583		$	55,640,636

Cost of revenues		46,364,050			22,036,935			91,643,344			52,609,084

Gross profit		591,394			1,056,098			4,426,239			3,031,552

Selling and administrative expenses		2,012,282			1,956,356			4,768,673			3,965,447
Loss from operations		(1,420,888	)		(900,258	)		(342,434	)		(933,895	)

Other income (expense)
Interest income		16,501			61			58,023			132,342
Other nonoperating expense		(20,581	)		(47,023	)		(53,576	)		(102,147	)
Interest expense		(209,125	)		(243,708	)		(413,474	)		(539,552	)
Gain on sale of equipment		111,817			19,670			137,569			388,375
		(101,388	)		(271,000	)		(271,458	)		(120,982	)

Loss before income taxes		(1,522,276	)		(1,171,258	)		(613,892	)		(1,054,877	)

Income tax benefit		(397,818	)		(223,683	)		(120,818	)		(255,802	)

Net loss		(1,124,458	)		(947,575	)		(493,074	)		(799,075	)

Dividends on preferred stock		77,250			77,250			154,500			154,500

Net loss available to common shareholders	$	(1,201,708	)	$	(1,024,825	)	$	(647,574	)	$	(953,575	)

Weighted average shares outstanding-basic		14,060,456			14,239,836			14,102,117			14,239,836

Weighted average shares-diluted		14,060,456			14,239,836			14,102,117			14,239,836

Loss per share available to common shareholders	$	(0.085	)	$	(0.072	)	$	(0.046	)	$	(0.067	)

Loss per share-diluted available to common shareholders	$	(0.085	)	$	(0.072	)	$	(0.046	)	$	(0.067	)

The Accompanying Notes are an Integral Part of These Financial Statements

Energy Services of America Corporation

Consolidated Statements of Cash Flows

Unaudited

	Six Months Ended			Six Months Ended
	March 31,			March 31,
	2019			2018

Cash flows from operating activities:

Net loss	$	(493,074	)	$	(799,075	)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation expense		2,062,589			2,114,346
Gain on sale of equipment		(137,569	)		(388,375	)
Provision for deferred taxes		(76,050	)		(320,599	)
Decrease in contracts receivable		3,789,321			10,994,609
Decrease in retainage receivable		216,266			2,419,213
Decrease (increase) in other receivables		88,709			(2,459	)
Increase in contract assets		(8,168,213	)		(346,385	)
Increase in prepaid expenses		(1,008,410	)		(1,028,102	)
Increase (decrease) in accounts payable		2,479,674			(2,634,999	)
Increase (decrease) in accrued expenses		2,037,763			(1,778,307	)
(Decrease) increase in contract liabilities		(736,120	)		494,018
Decrease in income taxes payable		(545,237	)		-
Net cash (used in) provided by operating activities		(490,351	)		8,723,885

Cash flows from investing activities:
Investment in property and equipment		(1,811,044	)		(969,804	)
Proceeds from sales of property and equipment		402,909			443,340
Net cash used in investing activities		(1,408,135	)		(526,464	)

Cash flows from financing activities:
Preferred dividends paid		(154,500	)		(154,500	)
Treasury stock purchased by company		(204,569	)		-
Borrowings on lines of credit and short term debt, net of (repayments)		6,033,594			(4,573,780	)
Principal payments on long term debt		(2,075,128	)		(2,290,410	)
Net cash provided by (used in) financing activities		3,599,397			(7,018,690	)

Increase in cash and cash equivalents		1,700,911			1,178,731
Cash and cash equivalents beginning of period		1,065,550			1,675,525
Cash and cash equivalents end of period	$	2,766,461		$	2,854,256

Supplemental schedule of noncash investing and financing activities:
Purchases of property & equipment under financing agreements	$	29,534		$	-
Insurance premiums financed	$	3,159,083		$	3,130,859
Accrued dividends on preferred stock	$	77,250		$	77,250

Supplemental disclosures of cash flows information:
Cash paid during the year for:
Interest	$	413,474		$	539,552
Income taxes	$	630,670		$	21,357

The Accompanying Notes are an Integral Part of These Financial Statements

Energy Services of America Corporation

Consolidated Statements of Changes in Shareholders’ Equity

For the six months ended March 31, 2019 and 2018

															Total
	Common Stock					Additional Paid			Retained			Treasury			Shareholders'
	Shares			Amount		in Capital			Earnings (deficit)			Stock			Equity

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	)

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

Balance at September 30, 2018		14,194,517		$	1,484	$	61,239,470		$	(37,959,842	)	$	(65	)	$	23,281,047

Net loss		-			-		-			(493,074	)		-			(493,074	)

Preferred dividends		-			-		-			(154,500	)		-			(154,500	)

Treasury stock purchased by company		(171,329	)		-		(204,552	)		-			(17	)		(204,569	)

Balance at March 31, 2019		14,023,188		$	1,484	$	61,034,918		$	(38,607,416	)	$	(82	)	$	22,428,904

The Accompanying Notes are an Integral Part of These Financial Statements

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. 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. Wholly owned subsidiary S.T. Pipeline, formerly presented as a discontinued operation, has been absorbed into Energy Services in 2019 for financial statement presentation.

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, 2018 and 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC on December 28, 2018. 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, 2019 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. 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. REVENUE RECOGNITION

On October 1, 2018, the Company adopted an Accounting Standard Update, Revenue from Contracts with Customers (Topic 606). The core principle of Topic 606 is that revenue will be recognized when promised goods or services are transferred to customers in an amount that reflects consideration for which entitlement is expected in exchange for those goods or services. We adopted Topic 606 using a modified retrospective transition approach and elected to apply Topic 606 to contracts with customers that are not substantially complete, i.e. less than 90% complete, as of October 1, 2018. The adoption of Topic 606 did not have a material impact on the Company’s financial statements.

	March 31, 2019

					Balance Without
	As Reported		Adjustments		ASC 606 Adoption
Assets
Accounts receivable-trade	$	18,438,234	$	-	$	18,438,234
Contract assets		13,521,588		-		13,521,588
Other current assets		12,557,966		-		12,557,966
Total current assets		44,517,788		-		44,517,788
Total fixed assets		16,328,638		-		16,328,638
Total assets	$	60,846,426	$	-	$	60,846,426

						Balance Without
	As Reported			Adjustments		ASC 606 Adoption
Liabilities
Contract liabilities	$	2,525,081		$	-	$	2,525,081
Other current liabilities		29,513,546			-		29,513,546
Total current liabilities		32,038,627			-		32,038,627
Other long-term liabilities		6,378,895			-		6,378,895
Total liabilities		38,417,522			-		38,417,522
Retained earnings		(38,607,416	)		-		(38,607,416	)
Stockholders' equity		22,428,904			-		22,428,904
Total liabilities and stockholders' equity	$	60,846,426		$	-	$	60,846,426

						Balance Without
	As Reported			Adjustments		ASC 606 Adoption
Revenue	$	96,069,583		$	-	$	96,069,583
loss before income taxes		(613,892	)		-		(613,892	)
Income tax benefit		(120,818	)		-		(120,818	)
Net loss		(493,074	)		-		(493,074	)
Net loss available to common shareholders	$	(647,574	)	$	-	$	(647,574	)

3. DISAGGREGATION OF REVENUE

We disaggregate our revenue based on our operating groups and contract types as it is the format that is regularly reviewed by management. Our reportable operating groups are: Petroleum and Gas, Water, Sewer and other services, and Electrical and Mechanical services. Our contract types are: Lump Sum, Unit Price, and Cost Plus and Time and Material (T&M). The following tables present our disaggregated revenue for the three and six months ended March 31, 2019 and 2018:

Three months ended March 31, 2019

	Petroleum & Gas		Water, Sewer and Other			Electrical and Mechanical			Total revenue from contracts

Lump sum contracts	$	-	$	-		$	7,073,312		$	7,073,312
Unit price contracts		28,295,402		(768,333	)		-			27,527,069
Cost plus and T&M contracts		1,163,461		86,801			4,222,830			5,473,092
Revenue from contracts in progress	$	29,458,863	$	(681,532	)	$	11,296,142		$	40,073,473

Lump sum contracts	$	-	$	-		$	3,359,764		$	3,359,764
Unit price contracts		461,433		2,897,005			-			3,358,438
Cost plus and T&M contracts		29,289		172,899			(38,419	)		163,769
Revenue from completed contracts		490,722		3,069,904			3,321,345			6,881,971

Total revenue from contracts	$	29,949,585	$	2,388,372		$	14,617,487		$	46,955,444

Earned over time	$	29,949,585	$	2,388,372		$	14,430,794		$	46,768,751
Earned at point in time		-		-			186,693			186,693
Total revenue from contracts	$	29,949,585	$	2,388,372		$	14,617,487		$	46,955,444

Three months ended March 31, 2018

	Petroleum & Gas		Water, Sewer and Other		Electrical and Mechanical			Total revenue from contracts

Lump sum contracts	$	-	$	-	$	7,046,412		$	7,046,412
Unit price contracts		1,749,056		1,064,689		-			2,813,745
Cost plus and T&M contracts		1,039,058		154,369		2,542,709			3,736,136
Revenue from contracts in progress	$	2,788,114	$	1,219,058	$	9,589,121		$	13,596,293

Lump sum contracts	$	-	$	-	$	3,491,575		$	3,491,575
Unit price contracts		3,263,465		580,103		(816,737	)		3,026,831
Cost plus and T&M contracts		153,459		6,723		2,818,152			2,978,334
Revenue from completed contracts		3,416,924		586,826		5,492,990			9,496,740

Total revenue from contracts	$	6,205,038	$	1,805,884	$	15,082,111		$	23,093,033

Earned over time	$	6,205,038	$	1,805,884	$	14,888,364		$	22,899,286
Earned at point in time		-		-		193,747			193,747
Total revenue from contracts	$	6,205,038	$	1,805,884	$	15,082,111		$	23,093,033

Six months ended March 31, 2019

	Petroleum & Gas		Water, Sewer and Other		Electrical and Mechanical		Total revenue from contracts

Lump sum contracts	$	-	$	-	$	14,410,022	$	14,410,022
Unit price contracts		54,645,570		2,303,710		-		56,949,280
Cost plus and T&M contracts		2,824,471		461,125		8,771,509		12,057,105
Revenue from contracts in progress	$	57,470,041	$	2,764,835	$	23,181,531	$	83,416,407

Lump sum contracts	$	-	$	-	$	4,239,742	$	4,239,742
Unit price contracts		2,926,568		3,295,919		-		6,222,487
Cost plus and T&M contracts		463,339		182,741		1,544,867		2,190,947
Revenue from completed contracts		3,389,907		3,478,660		5,784,609		12,653,176

Total revenue from contracts	$	60,859,948	$	6,243,495	$	28,966,140	$	96,069,583

Earned over time	$	60,859,948	$	6,243,495	$	28,512,418	$	95,615,861
Earned at point in time		-		-		453,722		453,722
Total revenue from contracts	$	60,859,948	$	6,243,495	$	28,966,140	$	96,069,583

Six months ended March 31, 2018

	Petroleum & Gas		Water, Sewer and Other		Electrical and Mechanical		Total revenue from contracts

Lump sum contracts	$	-	$	-	$	17,702,601	$	17,702,601
Unit price contracts		8,453,125		2,760,541		-		11,213,666
Cost plus and T&M contracts		2,838,478		183,342		6,211,544		9,233,364
Revenue from contracts in progress	$	11,291,603	$	2,943,883	$	23,914,145	$	38,149,631

Lump sum contracts	$	-	$	-	$	5,487,822	$	5,487,822
Unit price contracts		6,894,839		1,480,652		-		8,375,491
Cost plus and T&M contracts		802,817		6,723		2,818,152		3,627,692
Revenue from completed contracts		7,697,656		1,487,375		8,305,974		17,491,005

Total revenue from contracts	$	18,989,259	$	4,431,258	$	32,220,119	$	55,640,636

Earned over time	$	18,989,259	$	4,431,258	$	31,785,412	$	55,205,929
Earned at point in time		-		-		434,707		434,707
Total revenue from contracts	$	18,989,259	$	4,431,258	$	32,220,119	$	55,640,636

4. CONTRACT BALANCES

Accounts receivable, which are included in current assets on the Consolidated Balance Sheets, totaled $18.4 million at March 31, 2019, a $3.8 million decrease from $22.2 million at September 30, 2018. The decrease was mainly due to timing of billings and receipts. Contract assets, which are included in current assets on the Consolidated Balance Sheets, totaled $13.5 million at March 31, 2019, a $8.2 million increase from $5.4 million at September 30, 2018. This was due to an increase in costs and estimated earnings in excess of billings on uncompleted projects. Contract liabilities, which are included in current liabilities on the Consolidated Balance Sheets, totaled $2.5 million at March 31, 2019, a $736,000 decrease from $3.3 million at September 30, 2018. This was due to a decrease in billings in excess of costs and estimated earnings on uncompleted projects.

The Company’s accounts receivable consists of amounts that have been billed to customers. Collateral is generally not required. A majority of the Company’s contracts have monthly billing terms and payment terms within 30 to 45 days after invoices have been issued. The Company attempts to negotiate two-week billing terms and 15-day payment terms on larger projects. The timing of billings to customers may generate contract assets or contract liabilities.

During the six months ended March 31, 2019, we recognized revenue of $2.0 million that was included in the contract liability balance at September 30, 2018.

Accounts receivable, contract assets and contract liabilities consisted of the following:

	September 30, 2018		March 31, 2019		Change

Accounts receivable-trade	$	22,227,555	$	18,438,234	$	(3,789,321	)

Contract assets
Cost and estimated eanings in excess of billings	$	5,353,375	$	13,521,588	$	8,168,213

Contract liabilites
Billings in excess of cost and estimated earnings	$	3,261,201	$	2,525,081	$	(736,120	)

5. PERFORMANCE OBLIGATIONS

The Company provides construction services that can be classified into several groups: petroleum and gas, water, sewer and other, and electrical and mechanical services. Generally, our contracts contain one performance obligation that is satisfied over time because our performance typically creates or enhances an asset that the customer controls as the asset is created or enhanced. We recognize revenue as performance obligations are satisfied and control of the promised good and service is transferred to the customer. Revenue is ordinarily recognized over time as control is transferred to the customers by measuring the progress toward complete satisfaction of the performance obligation(s) using an input (i.e., “cost to cost”) method. Under the cost to cost method, costs incurred to-date are generally the best depiction of transfer of control. All contract costs, including those associated with affirmative claims, change orders and back charges, are recorded as incurred and revisions to estimated total costs are reflected as soon as the obligation to perform is determined. Contract costs consist of direct costs on contracts, including labor and materials, amounts payable to subcontractors, direct overhead costs and equipment expense (primarily depreciation, fuel, maintenance and repairs).

The Company’s accounts receivable consists of amounts that have billed to customers. Collateral is generally not required. A majority of the Company’s contracts have monthly billing terms and payment terms within 30 to 45 days after invoices have been issued. The Company attempts to negotiate two-week billing terms and 15-day payment terms on larger projects. The timing of billings to customers may generate contract assets or contract liabilities. Certain construction contracts include retention provisions to provide assurance to our customers that we will perform in accordance with the contract terms and are therefore not considered a financing benefit. The balances billed but not paid by customers pursuant to these provisions generally become due upon completion and acceptance of the project work or products by the customer. We have determined there are no significant financing components in our contracts during the three and six months ended March 31, 2019.

During the three and six months ended March 31, 2019, we recognized revenue of $518,000 and $370,000, respectively, as a result of changes in contract transaction price related to performance obligations that were satisfied prior to September 30, 2018. The changes in contract transaction price were from items such as changes in projected profit, executed or estimated change orders, and unresolved contract modifications and claims.

The Company does not sell warranties for its construction services. At March 31, 2019, the Company had $20.7 million in remaining unsatisfied performance obligations, in which revenue is expected to be recognized in less than twelve months.

6. UNCOMPLETED CONTRACTS

Costs, estimated earnings, and billings on uncompleted contracts as of March 31, 2019 and September 30, 2018 are summarized as follows:

	March 31,		September 30,
	2019		2018
Costs incurred on contracts in progress	$	129,885,573	$	154,793,209
Estimated earnings, net of estimated losses		12,375,997		11,687,859
		142,261,570		166,481,068
Less billings to date		131,265,063		164,388,894
	$	10,996,507	$	2,092,174

Costs and estimated earnings in excess of billed on uncompleted contracts	$	13,521,588	$	5,353,375

Less billings in excess of costs and estimated earnings on uncompleted contracts		2,525,081		3,261,201

	$	10,996,507	$	2,092,174

Backlog at March 31, 2019 and September 30, 2018 was $48.0 million and $71.1 million, respectively. The March 31, 2019 backlog does not include $15.0 million in projects that were subsequently awarded.

7. 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 $8.7 million at March 31, 2019 was $8.6 million. The fair value of the aggregate principal amount of the Company’s fixed-rate debt of $10.3 million at September 30, 2018 was $10.2 million.

All receivables and payables are carried at net realizable value which approximates fair value because of their short duration to maturity.

8. EARNINGS PER SHARE

The amounts used to compute the earnings per share for the three and six months ended March 31, 2019 and 2018 are summarized below.

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	March 31,			March 31,			March 31,			March 31,
	2019			2018			2019			2018

Net loss	$	(1,124,458	)	$	(947,575	)	$	(493,074	)	$	(799,075	)

Dividends on preferred stock		77,250			77,250			154,500			154,500

Loss available to common shareholders	$	(1,201,708	)	$	(1,024,825	)	$	(647,574	)	$	(953,575	)

Weighted average shares outstanding		14,060,456			14,239,836			14,102,117			14,239,836

Weighted average shares outstanding-diluted		14,060,456			14,239,836			14,102,117			14,239,836

Loss per share available to common shareholders	$	(0.085	)	$	(0.072	)	$	(0.046	)	$	(0.067	)

Loss per share available to common shareholders-diluted	$	(0.085	)	$	(0.072	)	$	(0.046	)	$	(0.067	)

9. INCOME TAXES

The components of income taxes are as follows:

	Six months ended March 31,
	2019			2018
Federal
Current	$	(34,942	)	$	(152,484	)
Deferred		(59,319	)		(63,045	)
Total		(94,261	)		(215,529	)

State
Current	$	(9,826	)	$	(63,716	)
Deferred		(16,731	)		23,443
Total		(26,557	)		(40,273	)

Total income tax benefit	$	(120,818	)	$	(255,802	)

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

	March 31,			September 30,
	2019			2018
Deferred income tax liabilities
Long-term
Property and equipment	$	(1,884,522	)	$	(2,023,641	)
Other		19,805			(4,639	)
Total deferred income tax liabilities	$	(1,864,717	)	$	(2,028,280	)

Deferred income tax assets
Other		612,392			699,905
Net operating loss carryforward		130,851			-
Total deferred income tax assets		743,243			699,905
Total net deferred income tax liabilities	$	(1,121,474	)	$	(1,328,375	)

The Tax Cuts and Jobs Act of 2017 (the “Act”) was enacted on December 22, 2017. Consequent to the passage of the Act, the Company’s deferred tax assets and liabilities were adjusted for the effects of the Act’s changes in the tax law and rates. For the year ended September 30, 2018, the Company realized approximately $588,000 in income tax benefits recorded to income tax expense to reflect the impact of the Act’s rate change on the Company’s net deferred tax assets.

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.

10. SHORT-TERM AND LONG-TERM DEBT

Short-term debt consists of the following:

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 it replaced the $15.0 million revolving line of credit (“Operating Line of Credit (2017)”) entered into with United Bank, Inc. effective February 27, 2017. This agreement expired on February 28, 2019 but was extended through April 28, 2019 by the Company’s lenders. The Company received a twelve-month extension on May 7, 2019.

The Company had borrowed $5.5 million against the Operating Line of Credit (2018) as of September 30, 2018 and had up to $7.0 million available to borrow depending on the Company’s borrowing base report. The Company had borrowed $10.0 million against the Operating Line of Credit (2018) as of March 31, 2019 and had up to $2.5 million available to borrow depending on the Company’s borrowing base report.

Major items excluded from the borrowing base calculation are receivables from bonded jobs and retainage as well as all items greater than ninety (90) days old. Line of credit borrowings are collateralized by the Company’s accounts receivable. 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:

Minimum tangible net worth of $17.0 million to be measured quarterly

Minimum traditional debt service coverage of 1.50x to be measured quarterly on a rolling twelve- month basis

Minimum current ratio of 1.50x to be measured quarterly

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:

Minimum tangible net worth of $19.0 million to be measured quarterly

Minimum traditional debt service coverage of 2.0x to be measured quarterly on a rolling twelve-month basis

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 not in compliance with all covenants for the $12.5 million Operating Line of Credit (2018) at March 31, 2019; however, the Company received a waiver on May 7, 2019. On the same date, the Company’s lenders conditionally approved a five-year $10.0 million term note dependent on an ongoing equipment appraisal. The interest rate on this note is fixed at 5.50%. The purpose of this note is to finance a specific construction project currently in progress.

The Company also finances insurance policy premiums on a short-term basis through a financing company. These insurance policies included: workers’ compensation, general liability, automobile, umbrella, and equipment policies. It is typical that the Company makes a down payment in January and finances the remaining premium amount over nine or ten monthly payments. In January 2019, The Company financed $3.2 million in insurance premium policies and had an outstanding balance of $2.1 million at March 31, 2019.

A summary of short-term and long-term debt as of March 31, 2019 and September 30, 2018 is as follows:

	March 31,		September 30,
	2019		2018

Line of credit payable to bank, monthly interest at 5.50%, final payment due by April 28, 2020.	$	10,000,000	$	5,500,000

Notes payable to finance companies, due in monthly installments totaling $62,887 including interest ranging from 0.0% to 7.62%, final payments due April 2019 through March 2024, secured by equipment.		999,979		1,332,993

Note payable to finance company for insurance premiums financed, due in monthly installments totaling $267,677, including interest rate at 2.77%, final payment due November 2019.		2,102,841		569,247

Notes payable to bank, due in monthly installments totaling $7,799, including interest at 4.82%, final payment due November 2034 secured by building and property.		1,033,472		1,054,248

Notes payable to bank, due in monthly installments totaling $12,028, including interest at 5.0%, final payment due November 2025 secured by building and property.		802,220		851,768

Notes payable to bank, due in monthly installments totaling $172,473, including interest at 6.5%, final payment due February 2019 secured by equipment.		-		702,097

Notes payable to bank, due in monthly installments totaling $30,914, including interest at 5.0%, final payment due February 2019 secured by equipment.		-		154,116

Notes payable to bank, due in monthly installments totaling $98,865, including interest at 4.99%, final payment due September 2022 secured by equipment.		3,548,394		4,045,025

Notes payable to bank, due in monthly installments totaling $46,482, including interest at 5.00%, final payment due September 2021 secured by equipment.		1,260,239		1,549,651

Total debt		19,747,145		15,759,145

Less current maturities		14,489,724		9,290,515

Total long term debt	$	5,257,421	$	6,468,630

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 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, 2019 were $47.0 million of which 63.8% was attributable to gas & petroleum work, 31.1% to electrical and mechanical services, and 5.1% to water and sewer installations and other ancillary services. The Company’s consolidated operating revenues for the six months ended March 31, 2019 were $96.1 million of which 63.5% was attributable to gas & petroleum work, 30.2% to electrical and mechanical services, and 6.3% to water and sewer installations and other ancillary services.

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.

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

Goff Full Stream

Mountaineer Gas

TransCanada Corporation

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.

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.

Second Quarter Overview

The following is an overview of results from operations for the three and six months ended March 31, 2019 and 2018.

	Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
	March 31,			March 31,			March 31,			March 31,
	2019			2018			2019			2018

Revenue	$	46,955,444		$	23,093,033		$	96,069,583		$	55,640,636

Cost of revenues		46,364,050			22,036,935			91,643,344			52,609,084

Gross profit		591,394			1,056,098			4,426,239			3,031,552

Selling and administrative expenses		2,012,282			1,956,356			4,768,673			3,965,447
Loss from operations		(1,420,888	)		(900,258	)		(342,434	)		(933,895	)

Other income (expense)
Interest income		16,501			61			58,023			132,342
Other nonoperating expense		(20,581	)		(47,023	)		(53,576	)		(102,147	)
Interest expense		(209,125	)		(243,708	)		(413,474	)		(539,552	)
Gain on sale of equipment		111,817			19,670			137,569			388,375
		(101,388	)		(271,000	)		(271,458	)		(120,982	)

Loss before income taxes		(1,522,276	)		(1,171,258	)		(613,892	)		(1,054,877	)

Income tax benefit		(397,818	)		(223,683	)		(120,818	)		(255,802	)

Net loss		(1,124,458	)		(947,575	)		(493,074	)		(799,075	)

Dividends on preferred stock		77,250			77,250			154,500			154,500


Net loss available to common shareholders	$	(1,201,708	)	$	(1,024,825	)	$	(647,574	)	$	(953,575	)

Weighted average shares outstanding-basic		14,060,456			14,239,836			14,102,117			14,239,836

Weighted average shares-diluted		14,060,456			14,239,836			14,102,117			14,239,836

Loss per share available to common shareholders	$	(0.085	)	$	(0.072	)	$	(0.046	)	$	(0.067	)

Loss per share-diluted available to common shareholders	$	(0.085	)	$	(0.072	)	$	(0.046	)	$	(0.067	)

Results of Operations for the Three and Six Months Ended March 31, 2019 Compared to the Three and Six Months Ended March 31, 2018

Revenues. Total revenues increased by $23.9 million or 103.3% to $47.0 million for the three months ended March 31, 2019 from $23.1 million for the same period in 2018. The increase was primarily attributable to a $23.7 million revenue increase in petroleum and gas work and a $643,000 revenue increase in water and sewer projects and other ancillary services, partially offset by a $465,000 revenue decrease in electrical and mechanical services.

Total revenues increased by $40.4 million or 72.7% to $96.1 million for the six months ended March 31, 2019 from $55.6 million for the same period in 2018. The increase was primarily attributable to a $41.9 million revenue increase in petroleum and gas work and a $1.8 million revenue increase in water and sewer projects and other ancillary services, partially offset by a $3.3 million revenue decrease in electrical and mechanical services.

Cost of Revenues. Total cost of revenues increased by $24.4 million or 110.4% to $46.4 million for the three months ended March 31, 2019 from $22.0 million for the same period in 2018. The increase was primarily attributable to a $24.3 million cost increase in petroleum and gas work, a $224,000 cost increase in water and sewer projects and other ancillary services, and a $52,000 cost increase in equipment and tool shop operations not allocated to projects, partially offset by a $278,000 cost decrease in electrical and mechanical services.

Total cost of revenues increased by $39.0 million or 74.2% to $91.6 million for the six months ended March 31, 2019 from $52.6 million for the same period in 2018. The increase was primarily attributable to a $41.2 million cost increase in petroleum and gas work, a $997,000 cost increase in water and sewer projects and other ancillary services, partially offset by a $2.9 million cost decrease in electrical and mechanical services and a $250,000 cost decrease in equipment and tool shop operations not allocated to projects.

Gross Profit. Total gross profit decreased by $465,000 or 44.0% to $591,000 for the three months ended March 31, 2019 from $1.1 million for the same period in 2018. The decrease was primarily attributable to a $645,000 gross profit decrease in petroleum and gas work, a $186,000 gross profit decrease in electrical and mechanical services, and a $52,000 gross profit decrease related to equipment and tool shop operations costs not allocated to projects, partially offset by a $418,000 gross profit increase in water and sewer projects and other ancillary services.

Total gross profit increased by $1.4 million or 46.0% to $4.4 million for the six months ended March 31, 2019 from $3.0 million for the same period in 2018. The increase was primarily attributable to a $763,000 gross profit increase in petroleum and gas work, a $748,000 gross profit increase in water and sewer projects and other ancillary services and a $250,000 gross profit increase related to equipment and tool shop operations costs not allocated to projects, partially offset by a $366,000 gross profit decrease in electrical and mechanical services.

Selling and administrative expenses. Total selling and administrative expenses increased by $56,000 or 2.9% to $2.0 million for the three months ended March 31, 2019 from $2.0 million for the same period in 2018. The increase was primarily related to additional operations personnel needed to secure and manage.

Total selling and administrative expenses increased by $803,000 or 20.3% to $4.8 million for the six months ended March 31, 2019 from $4.0 million for the same period in 2018. The increase was primarily related to additional operations personnel needed to secure and manage projects and payment of performance bonuses, which were significantly less in 2018.

Interest Expense. Interest expense decreased by $35,000 or 14.2% to $209,000 for the three months ended March 31, 2019 from $244,000 for the same period in 2018. This decrease was primarily due to the timing of line of credit borrowings and decreasing long-term debt.

Interest expense decreased by $127,000 or 23.4% to $413,000 for the six months ended March 31, 2019 from $540,000 for the same period in 2018. This decrease was primarily due to the timing of line of credit borrowings and decreasing long-term debt

Net Loss. Loss before income taxes was $1.5 million for the three months ended March 31, 2019, compared to $1.2 million for the same period in 2018. Loss before income taxes was $614,000 for the six months ended March 31, 2019, compared to $1.1 million for the same period in 2018. The losses were due to the items mentioned above.

Income tax benefit for the three months ended March 31, 2019 was $398,000 compared to $224,000 for the same period in 2018. The increase in income tax benefit was primarily due to the decrease in taxable income. Income tax benefit for the six months ended March 31, 2019 was $121,000 compared to $256,000 for the same period in 2018. The decrease in income tax benefit was primarily due to the increase in taxable income.

The effective income tax rate for the three months ended March 31, 2019 was (26.1%), as compared to (19.1%) for the same period in 2018. The effective income tax rate for the six months ended March 31, 2019 was (19.7%), as compared to (24.2%) for the same period in 2018. 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 used a “blended” tax rate of 24.5% for fiscal year 2018. Beginning with fiscal year 2019, the Company’s federal tax rate will be 21%.

Dividends on preferred stock for the three and six months ended March 31, 2019 and 2018 were $77,250 and $154,500, respectively.

Net loss available to common shareholders for the three months ended March 31, 2019 was $1.2 million compared to $1.0 million for the same period in 2018. Net loss available to common shareholders for the six months ended March 31, 2019 was $648,000 compared to $954,000 for the same period in 2018.

Comparison of Financial Condition at March 31, 2019 and September 30, 2018

The Company had total assets of $60.8 million at March 31, 2019, an increase of $6.1 million from the prior fiscal year end balance of $54.7 million. Contract assets totaled $13.5 million at March 31, 2019, an increase of $8.1 million 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, 2019 compared to September 30, 2018. Cash and cash equivalents totaled $2.8 million at March 31, 2019, an increase of $1.7 million from the prior fiscal year end balance of $1.1 million. The increase was primarily due to the decrease in accounts receivable and the increase in accounts payable. Prepaid expenses and other totaled $5.1 million at March 31, 2019, an increase of $1.0 million from the prior fiscal year end balance of $4.1 million. This increase was primarily due to the financing of the Company’s insurance policies, partially offset by a reduction in prepaid insurance that was expensed during the six months ended March 31, 2019. Accounts receivable, which totaled $18.4 million at March 31, 2019, decreased by $3.8 million from the prior fiscal year end balance of $22.2 million. The decrease was primarily due to the reduced billings on significant projects at March 31, 2019 and the collection of receivables from September 30, 2018. The Company had property, plant and equipment of $16.3 million at March 31, 2019, a decrease of $487,000 from prior fiscal year end balance of $16.8 million. This decrease was due to depreciation of $2.1 million and net equipment disposals of $265,000, partially offset by equipment acquisitions of $1.8 million. Other receivables totaled $47,000 at March 31, 2019, a decrease of $220,000 from the prior fiscal year end balance of $266,000. The decrease was due to the collection of other receivables from September 30, 2018. Retainages receivable totaled $4.7 million at March 31, 2019, a decrease of $216,000 from the prior fiscal year end balance of $4.9 million. The decrease was due to the billing of retainages from September 30, 2018.

The Company had total liabilities of $38.4 million at March 31, 2019, an increase of $7.0 million from the prior fiscal year end balance of $31.4 million. Lines of credit and short-term borrowings totaled $12.1 million at March 31, 2019, an increase of $6.0 million from the prior fiscal year end balance of $6.1 million. This increase was primarily due to $4.5 million in line of credit borrowings and a $1.5 million increase in short term borrowings related to insurance premiums financed. Accounts payable totaled $8.7 million at March 31, 2019, an increase of $2.5 million from the prior fiscal year end balance of $6.2 million. The increase is due to significant project costs during fiscal year 2019. Accrued expenses and other current liabilities totaled $6.3 million at March 31, 2019, an increase of $2.0 million from the prior fiscal year end balance of $4.3 million. The increase was primarily due to significant project costs during fiscal year 2019. Long-term debt totaled $5.3 million at March 31, 2019, a decrease of $1.2 million from the prior fiscal year end balance of $6.5 million. The decrease in long-term debt was due to principal repayments on such debt. Current maturities of long-term debt totaled $2.4 million at March 31, 2019, a decrease of $834,000 from the prior fiscal year end balance of $3.2 million. Contract liabilities totaled $2.5 million at March 31, 2019, a decrease of $736,000 from the prior fiscal year end total of $3.3 million. The decrease was due to a difference in the timing of project billings at March 31, 2019 compared to at September 30, 2018. The decrease in current maturities of long-term debt was due to principal repayments on such debt. Income taxes payable totaled $0 at March 31, 2019, a decrease of $545,000 from the prior fiscal year end balance of $545,000. The decrease was due to the payment of income taxes from September 30, 2018 and the taxable loss for the six months ended March 31, 2019. Deferred tax liabilities totaled $1.1 million at March 31, 2019, a decrease of $207,000 from the prior fiscal year end balance of $1.3 million.

Shareholders’ equity was $22.4 million at March 31, 2019, a decrease of $852,000 from the prior fiscal year end balance of $23.3 million. This decrease was due to the net loss available to common shareholders of $648,000 for the six months ended March 31, 2019 and $205,000 in common stock repurchased by the Company.

Liquidity and Capital Resources

Indebtedness

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. This note was paid in full during the second quarter of fiscal year 2019. In addition, the Company entered into a separate five-year term loan agreement with First Guaranty Bank for $1.6 million, which was later refinanced by United Bank. Taken together, the $10.4 million in new financings superseded the prior financing arrangements the Company had with United Bank, Inc. and other lenders. This was reported in the Company’s February 4, 2014 Form 8-K filing. The loan was collateralized by the Company’s accounts receivable and equipment.

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

Minimum tangible net worth of $10.0 million to be measured quarterly

Minimum traditional debt service coverage of 1.50x to be measured quarterly on a rolling twelve-month basis

Minimum current ratio of 1.30x to be measured quarterly

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 not in compliance with all loan covenants at March 31, 2019; however, the Company received a waiver on May 7, 2019.

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 4.82% with monthly payments of $7,800. The interest rate on this note is subject to change from time to time based on changes in The U.S. Treasury yield, adjusted to a constant maturity of three years as published by the Federal Reserve weekly. The 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 was collateralized by the Company’s accounts receivable and equipment. The note was paid in full during the second quarter of fiscal year 2019.

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, 2019, the Company had borrowed $2.46 million against this line of credit and made principal payments of $1.2 million. The loan is collateralized by the equipment purchased under this agreement.

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 5.0% with monthly payments of $12,028. 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, 2019, the Company had borrowed $5.0 million against this line of credit and made principal payments of $1.5 million. The loan is collateralized by the equipment purchased under this agreement.

On May 7, 2019, the Company’s lenders conditionally approved a five-year $10.0 million term note. The interest rate on this note is fixed at 5.50%. The purpose of this note is to finance a specific construction project currently in progress. The $10.0 million borrowed against the operating line of credit at March 31, 2019 would be refinanced by this note.

Operating Line of Credit

Under the terms of the agreement, the Company must meet the following loan covenants to access the first $12.5 million:

Minimum tangible net worth of $17.0 million to be measured quarterly

Minimum traditional debt service coverage of 1.50x to be measured quarterly on a rolling twelve- month basis

Minimum current ratio of 1.50x to be measured quarterly

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:

Minimum tangible net worth of $19.0 million to be measured quarterly

Minimum traditional debt service coverage of 2.0x to be measured quarterly on a rolling twelve-month basis

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.

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, 2019, the Company had operating lease commitments of $74,000 with various expiration dates through March 2021.

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, 2019, 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, 2019, the Company had $8.9 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.

The Company had one customer that exceeded 10.0% of revenues for the six months ended March 31, 2019. The customer, Goff Full Stream Interconnect, represented 41.8% of revenues. The Company had three customers that exceeded 10.0% of receivables at March 31, 2019. These customers, Marathon Petroleum, Goff Full Stream Interconnect and Dow Chemical, represented 22.9%, 14.9%, and 11.7% of receivables net of retention at March 31, 2019, respectively.

The Company had three customers that exceeded 10.0% of revenues for the six months ended March 31, 2018. The customers, Toyota Motor Mfg., Marathon Petroleum, and Dow Chemical, represented 24.3%, 15.6%, and 10.4% of revenues, respectively. The Company had one customer that exceeded 10.0% of receivables at March 31, 2018. The customer, Toyota Motor Mfg., represented 19.9% of receivables net of retention at March 31, 2018.

Litigation

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. Other than described above, at March 31, 2019, the Company was not involved in any legal proceedings other than in the ordinary course of business. The Company is a party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. 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. At March 31, 2019, 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, was a director and secretary of First Bank of Charleston. Mr. Nester Logan and Mr. Samuel Kapourales, directors of Energy Services, were also directors of First Bank of Charleston. On October 15, 2018, First Bank of Charleston was merged into Premier Bank, Inc., a wholly owned subsidiary of Premier Financial Bancorp, Inc. Mr. Marshall Reynolds, Chairman of the Board of Energy Services, holds the same position with Premier Financial Bancorp Inc. Mr. Keith Molihan and Mr. Neal Scaggs are both directors of Energy Services and hold the same position with Premier Financial Bancorp, Inc. The interest rate on the loan agreement is 4.82% with monthly payments of $7,800. As of March 31, 2019, we have paid approximately $166,000 in principal and approximately $231,000 in interest since the beginning of the loan.

There were no new material related party transactions during the six months ended March 31, 2019.

Inflation

Due to relatively low levels of inflation during the six months ended March 31, 2019 and 2018, inflation did not have a significant effect on our results.

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.

Revenue Recognition. On October 1, 2018, the Company adopted an Accounting Standard Update, Revenue from Contracts with Customers (Topic 606). The core principle of Topic 606 is that revenue will be recognized when promised goods or services are transferred to customers in an amount that reflects consideration for which entitlement is expected in exchange for those goods or services. We adopted Topic 606 using a modified retrospective transition approach and elected to apply Topic 606 to contracts with customers that are not substantially complete, i.e. less than 90% complete, as of October 1, 2018. The adoption of Topic 606 did not have a material impact on the Company’s financial statements.

In addition, as of October 1, 2018, we began to separately present contract assets and liabilities on the Company’s consolidated balance sheet. Contract assets include costs and estimated earnings in excess of billings that were previously separately presented. Contract liabilities include billings in excess of costs and estimated earnings that were previously separately presented as well as provisions for losses, when occurred, that were previously included in accrued expenses and other current liabilities.

The accounting policies that were affected by Topic 606 and the changes thereto are as follows:

Revenue Recognition: Our revenue is primarily derived from construction contracts that can span several quarters. We recognize revenue in accordance with Topic 606. Topic 606 provides for a five-step model for recognizing revenue from contracts with customers as follows:

	1.	Identify the contract
	2.	Identify performance obligations
	3.	Determine the transaction price
	4.	Allocate the transaction price
	5.	Recognize revenue

The accuracy of our revenue and profit recognition in a given period depends on the accuracy of our estimates of the cost to complete each project. We believe our experience allows us to create materially reliable estimates. There are a number of factors that can contribute to changes in estimates of contract cost and profitability. The most significant of these include:

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

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

The transaction price is the amount of consideration to which we expect to be entitled in exchange for transferring goods and services to the customer. The consideration promised in a contract with customers may include both fixed amounts and variable amounts (e.g. bonuses/incentives or penalties/liquidated damages) to the extent that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved (i.e., probable and estimable). When a contract has a single performance obligation, the entire transaction price is attributed to that performance obligation. When a contract has more than one performance obligation, the transaction price is allocated to each performance obligation based on estimated relative standalone selling prices of the goods or services at the inception of the contract, which typically is determined using cost plus an appropriate margin.

Subsequent to the inception of a contract, the transaction price could change for various reasons, including the executed or estimated amount of change orders and unresolved contract modifications and claims to or from owners. Changes that are accounted for as an adjustment to existing performance obligations are allocated on the same basis at contract inception. Otherwise, changes are accounted for as separate performance obligation(s) and the separate transaction price is allocated as discussed above. Changes are made to the transaction price from unapproved change orders to the extent the amount can be reasonably estimated, and recovery is probable. On certain projects we have submitted and have pending unresolved contract modifications and affirmative claims (“affirmative claims”) to recover additional costs and the associated profit, if applicable, to which the Company believes it is entitled under the terms of contracts with customers, subcontractors, vendors or others. The owners or their authorized representatives and/or other third parties may be in partial or full agreement with the modifications or affirmative claims or may have rejected or disagree entirely or partially as to such entitlement.

Costs to obtain our contracts (“pre-bid costs”) that are not expected to be recovered from the customer are expensed as incurred and included in selling and administrative expenses on our consolidated statements of income. Costs to mobilize equipment and labor to a job site prior to substantive work beginning (“mobilization costs”) are capitalized as incurred and amortized over the expected duration of the contract. As of March 31, 2019, we had no material capitalized mobilization costs.

Contract Assets: Our contract assets include cost and estimated earnings in excess of billings that represent amounts earned and reimbursable under contracts, including claim recovery estimates, but have a conditional right for billing and payment such as achievement of milestones or completion of the project. With the exception of customer affirmative claims, generally, such unbilled amounts will become billable according to the contract terms and generally will be billed and collected over the next three months. Settlement with the customer of outstanding affirmative claims is dependent on the claims resolution process and could extend beyond one year. Based on our historical experience, we generally consider the collection risk related to billable amounts to be low. When events or conditions indicate that it is probable that the amounts outstanding become unbillable, the transaction price and associated contract asset is reduced.

Contract Liabilities: Our contract liabilities consist of provisions for losses and billings in excess of costs and estimated earnings. Provisions for losses are recognized in the consolidated statements of income at the uncompleted performance obligation level for the amount of total estimated losses in the period that evidence indicates that the estimated total cost of a performance obligation exceeds its estimated total revenue. Billings in excess of costs and estimated earnings are billings to customers on contracts in advance of work performed, including advance payments negotiated as a contract condition. Generally, unearned project-related costs will be earned over the next twelve months.

Self-Insurance. The Company has its workers’ compensation, general liability and auto insurance through a captive insurance company. While the Company believes that this arrangement has been very beneficial in reducing and stabilizing insurance costs the Company does have to maintain a surety deposit to guarantee payments of premiums. That account had a balance of $1.9 million as of March 31, 2019. Should the captive insurance company experience severe losses over an extended period, it could have a detrimental effect on the Company.

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, 2019, management concluded that the allowance for doubtful accounts was adequate.

New Accounting Pronouncements

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 is currently evaluating the impact, if any, that adoption will have on its consolidated financial statements.

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., which was extended to April 28, 2020, will be adequate to meet our cash needs for the Company’s 2019 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, 2019, the Company had borrowings of $10.0 million against the Operating Line of Credit (2018).

Currently, the Company is receiving bid opportunities from existing and potentially 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, 2019 was $48.0 million, which does not include $15 million in projects awarded after March 31, 2019. 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.

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 2019 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

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 28, 2018. 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) The repurchases of Energy Services of America Corporation’s shares of its common stock during the six months ended March 31, 2019 was as follows:

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Value of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs

October 1, 2018-October 31, 2018		75,669	$	1.22	$	92,355		1,302,996
November 1, 2018-November 30, 2018		31,999		1.23		39,201		1,270,997
December 1, 2018-December 31, 2018		15,678		1.18		18,443		1,255,319
January 1, 2019-January 31, 2019		9,771		1.09		10,625		1,245,548
February 1, 2019-February 28, 2019		9,791		1.18		11,529		1,235,757
March 1, 2019-March 31, 2019		28,421		1.14		32,417		1,207,336
Total		171,329	$	1.19	$	204,569

(1)	On August 3, 2018, the Company announced that the Board of Directors authorized a stock repurchase program under which the Company would repurchase up to 10%, or approximately 1,423,984 shares, of the Company's issued and outstanding stock. The repurchase program will expire on August 15, 2019.

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

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 15, 2019	By:	/s/ Douglas V. Reynolds
		Douglas V. Reynolds
		Chief Executive Officer

Date: May 15, 2019	By:	/s/ Charles P. Crimmel
		Charles P. Crimmel
		Chief Financial Officer