x | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||
For the quarterly period ended June 30, 2013 | |||
o | Transition report under Section 13 or 15(d) of the Securities Exchange act of 1934 | ||
For the transition period from _______________ to _________________ |
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) |
100 Industrial Lane, Huntington, West Virginia | 25702 | |||
(Address of Principal Executive Office) | (Zip Code) |
(304) 399-6300
|
||
(Registrant’s Telephone Number including area code)
|
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 Stockholders’ Equity
|
4
|
|
Notes to Unaudited Consolidated Financial Statements
|
5
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
10
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
22
|
Item 4.
|
Controls and Procedures
|
22
|
Part II:
|
Other Information
|
23
|
Item 1.
|
Legal Proceedings
|
23
|
Item 1A.
|
Risk Factors
|
23
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
23
|
Item 4.
|
Removed and Reserved
|
23
|
Item 6.
|
Exhibits
|
24
|
Signatures
|
25
|
June 30,
|
September 30,
|
|||||||
Assets
|
2013
|
2012
|
||||||
(Unaudited)
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 1,475,894 | $ | 1,398,301 | ||||
Accounts receivable-trade
|
16,450,972 | 15,632,300 | ||||||
Allowance for doubtful accounts
|
(239,568 | ) | (240,071 | ) | ||||
Retainages receivable
|
2,198,437 | 1,713,702 | ||||||
Other receivables
|
271,593 | 277,933 | ||||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
7,780,172 | 10,856,769 | ||||||
Deferred tax asset
|
501,709 | 1,250,154 | ||||||
Prepaid expenses and other
|
2,914,891 | 2,005,233 | ||||||
Assets of discontinued operations
|
2,386,031 | 7,808,451 | ||||||
Total Current Assets
|
33,740,131 | 40,702,772 | ||||||
Property, plant and equipment, at cost
|
28,642,757 | 29,060,709 | ||||||
less accumulated depreciation
|
(18,431,843 | ) | (16,485,112 | ) | ||||
Assets of discontinued operations, net
|
155,833 | 6,477,380 | ||||||
10,366,747 | 19,052,977 | |||||||
Total Assets
|
$ | 44,106,878 | $ | 59,755,749 | ||||
Liabilities and Stockholders’ Equity
|
||||||||
Current Liabilities
|
||||||||
Current maturities of long-term debt
|
$ | 5,702,850 | $ | 10,118,907 | ||||
Lines of credit and short term borrowings
|
12,008,653 | 18,516,276 | ||||||
Accounts payable
|
3,533,478 | 8,171,650 | ||||||
Accrued expenses and other current liabilities
|
3,502,300 | 3,177,481 | ||||||
Billings in excess of costs and estimated earnings on uncompleted contracts
|
3,359,069 | 1,305,559 | ||||||
Liabilities of discontinued operations
|
1,443,646 | 2,149,435 | ||||||
Total Current Liabilities
|
29,549,996 | 43,439,308 | ||||||
Long-term debt, less current maturities
|
1,253,480 | 1,623,771 | ||||||
Long-term debt, payable to shareholder
|
1,223,325 | 1,223,325 | ||||||
Deferred income taxes payable
|
3,908,400 | 4,426,751 | ||||||
Liabilities of discontinued operations
|
728,981 | 2,601,229 | ||||||
Total Liabilities
|
36,664,182 | 53,314,384 | ||||||
Stockholders’ equity
|
||||||||
Preferred stock, $.0001 par value Authorized 1,000,000 shares, none issued
|
- | - | ||||||
Common stock, $.0001 par value Authorized 50,000,000 shares Issued and outstanding 14,458,836 shares
|
1,446 | 1,446 | ||||||
Additional paid in capital
|
56,136,133 | 56,107,650 | ||||||
Retained earnings (deficit)
|
(48,694,883 | ) | (49,667,731 | ) | ||||
Total Stockholders’ equity
|
7,442,696 | 6,441,365 | ||||||
Total liabilities and stockholders’ equity
|
$ | 44,106,878 | $ | 59,755,749 |
1 |
Three Months Ended
|
Three Months Ended
|
Nine Months Ended
|
Nine Months Ended
|
|||||||||||||
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Revenue
|
$ | 26,551,541 | $ | 30,496,031 | $ | 78,424,217 | $ | 82,228,457 | ||||||||
Cost of revenues
|
24,133,642 | 30,532,221 | 71,185,726 | 78,159,235 | ||||||||||||
Gross profit (loss)
|
2,417,899 | (36,190 | ) | 7,238,491 | 4,069,222 | |||||||||||
Selling and administrative expenses
|
1,874,833 | 2,332,043 | 6,457,512 | 7,498,074 | ||||||||||||
Income (loss) from operations
|
543,066 | (2,368,233 | ) | 780,979 | (3,428,852 | ) | ||||||||||
Other income (expense)
|
||||||||||||||||
Interest income
|
(489 | ) | 172 | 230 | 2,534 | |||||||||||
Other nonoperating income (expense)
|
1,109 | 2,134 | (15,898 | ) | 4,534 | |||||||||||
Interest expense
|
(429,004 | ) | (467,162 | ) | (1,384,146 | ) | (1,423,298 | ) | ||||||||
Gain on sale of equipment
|
262,396 | 2,500 | 556,647 | 24,021 | ||||||||||||
(165,988 | ) | (462,356 | ) | (843,167 | ) | (1,392,209 | ) | |||||||||
Income (loss) from continuing operations before income taxes
|
377,078 | (2,830,589 | ) | (62,188 | ) | (4,821,061 | ) | |||||||||
Income tax expense (benefit)
|
253,209 | (1,088,247 | ) | 230,094 | (1,876,524 | ) | ||||||||||
Income (loss) from continuing operations
|
123,869 | (1,742,342 | ) | (292,282 | ) | (2,944,537 | ) | |||||||||
Income (loss) from discontinued operations net of tax expense
|
2,808,198 | (265,263 | ) | 1,265,130 | (1,845,159 | ) | ||||||||||
Net income (loss)
|
$ | 2,932,067 | $ | (2,007,605 | ) | $ | 972,848 | $ | (4,789,696 | ) | ||||||
Weighted average shares outstanding-basic
|
14,458,836 | 14,446,836 | 14,458,836 | 14,446,836 | ||||||||||||
Earnings (loss) per share from continuing operations
|
$ | 0.009 | $ | (0.121 | ) | $ | (0.020 | ) | $ | (0.204 | ) | |||||
Earnings (loss) per share
|
$ | 0.203 | $ | (0.139 | ) | $ | 0.067 | $ | (0.332 | ) |
2 |
Nine Months Ended
|
Nine Months Ended
|
|||||||
June 30,
|
June 30,
|
|||||||
|
2013
|
2012
|
||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$ | 972,848 | $ | (4,789,696 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Depreciation expense
|
3,318,695 | 4,386,571 | ||||||
Provision for bad debts
|
300,000 | - | ||||||
Gain on sale/disposal of equipment
|
(2,701,901 | ) | (44,479 | ) | ||||
Provision for deferred taxes
|
(872,844 | ) | (2,650,856 | ) | ||||
Share-based compensation expense
|
28,483 | 53,802 | ||||||
Decrease in contracts receivable
|
1,495,968 | 2,451,257 | ||||||
(Increase) decrease in retainage receivable
|
(11,222 | ) | 3,624,127 | |||||
(Increase) decrease in other receivables
|
46,476 | (478,480 | ) | |||||
Decrease in cost and estimated earnings in excess of billings on uncompleted contracts
|
3,480,082 | 1,215,694 | ||||||
(Increase) decrease in prepaid expenses
|
(888,377 | ) | 38,444 | |||||
Increase (decrease) in accounts payable
|
(5,023,111 | ) | 1,831,017 | |||||
Increase (decrease) in accrued expenses
|
66,969 | (712,527 | ) | |||||
Increase (decrease) in billings in excess of cost and estimated earnings on uncompleted contracts
|
1,990,510 | (856,795 | ) | |||||
Net cash provided by operating activities
|
2,202,576 | 4,068,079 | ||||||
Cash flows from investing activities:
|
||||||||
Investment in property & equipment
|
(563,088 | ) | (730,055 | ) | ||||
Proceeds from sales of property and equipment
|
8,805,630 | 186,094 | ||||||
Net cash provided by (used in) investing activities
|
8,242,542 | (543,961 | ) | |||||
Cash flows from financing activities:
|
||||||||
Repayment of loans from shareholders
|
- | (1,100,000 | ) | |||||
Borrowings on lines of credit and short term debt, net of (repayments)
|
(6,507,623 | ) | 2,106,249 | |||||
Principal payments on long term debt
|
(4,959,454 | ) | (3,927,358 | ) | ||||
Net cash used in financing activities
|
(11,467,077 | ) | (2,921,109 | ) | ||||
Increase (decrease) in cash and cash equivalents
|
(1,021,959 | ) | 603,009 | |||||
Cash beginning of period
|
2,661,721 | 2,965,296 | ||||||
Cash end of period
|
$ | 1,639,762 | $ | 3,568,305 | ||||
Supplemental schedule of noncash investing and financing activities:
|
||||||||
Purchases of property & equipment under financing agreements
|
$ | 173,106 | $ | 384,492 | ||||
Insurance premiums financed
|
$ | 2,784,193 | $ | 2,867,738 | ||||
Supplemental disclosures of cash flows information:
|
||||||||
Cash paid during the year for:
|
||||||||
Interest
|
$ | 1,346,206 | $ | 1,349,464 | ||||
Insurance premiums
|
$ | 2,427,308 | $ | 1,569,959 |
3 |
ENERGY SERVICES OF AMERICA CORPORATION
|
|||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
|
|||||||||
For the nine months ended June 30, 2013 and 2012
|
|||||||||
Unaudited
|
Total
|
||||||||||||||||||||
Common Stock
|
Additional Paid
|
Retained
|
Stockholders’
|
|||||||||||||||||
Shares
|
Amount
|
in Capital
|
Earnings (Deficit)
|
Equity
|
||||||||||||||||
Balance at September 30, 2011
|
14,446,836 | $ | 1,445 | $ | 56,059,825 | $ | (1,145,554 | ) | $ | 54,915,716 | ||||||||||
Share-based compensation expense
|
- | - | 53,802 | - | 53,802 | |||||||||||||||
Net loss
|
- | - | - | (4,789,696 | ) | (4,789,696 | ) | |||||||||||||
Balance at June 30, 2012
|
14,446,836 | $ | 1,445 | $ | 56,113,627 | $ | (5,935,250 | ) | $ | 50,179,822 | ||||||||||
Balance at September 30, 2012
|
14,458,836 | $ | 1,446 | $ | 56,107,650 | $ | (49,667,731 | ) | $ | 6,441,365 | ||||||||||
Share-based compensation expense
|
- | - | 28,483 | - | 28,483 | |||||||||||||||
Net income
|
- | - | - | 972,848 | 972,848 | |||||||||||||||
Balance at June 30, 2013
|
14,458,836 | $ | 1,446 | $ | 56,136,133 | $ | (48,694,883 | ) | $ | 7,442,696 |
4 |
Gross proceeds
|
$ | 8,105,230 | ||
Commission
|
(709,208 | ) | ||
Other auction expenses
|
(162,109 | ) | ||
Net proceeds
|
$ | 7,233,913 | ||
Book value of equipment
|
5,325,916 | |||
Gain on sale
|
$ | 1,907,997 |
In addition, on August 6, 2013, the Company issued 56 shares of Series A Preferred Stock to Marshall T. Reynolds, the Chairman of the Board of Directors of the Company, in exchange for Mr. Reynolds’ agreement to cancel and forgive the Company’s obligation under a promissory note held by Mr. Reynolds in the aggregate amount of $1,409,383 (including principal and accrued but unpaid interest). Mr. Reynolds did not receive any shares of common stock in connection with the exchange of the promissory note. Please see the Company’s Form 8-K filing on August 8, 2013 for further details.
5 |
6 |
June 30, 2013
|
September 30, 2012
|
|||||||
Costs incurred on contracts in progress
|
$ | 174,407,380 | $ | 177,189,987 | ||||
Estimated earnings, net of estimated losses
|
9,287,680 | 10,229,134 | ||||||
183,695,060 | 187,419,121 | |||||||
Less: Billings to date
|
179,273,957 | 177,867,911 | ||||||
$ | 4,421,103 | $ | 9,551,210 | |||||
|
||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts
|
$ | 7,780,172 | $ | 10,856,769 | ||||
Less: Billings in excess of costs and estimated earnings on uncompleted Contracts
|
3,359,069 | 1,305,559 | ||||||
$ | 4,421,103 | $ | 9,551,210 |
7 |
8 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
June 30, 2013
|
June 30, 2012
|
June 30, 2013
|
June 30, 2012
|
|||||||||||||
(In Millions)
|
(In Millions)
|
(In Millions)
|
(In Millions)
|
|||||||||||||
Sales
|
$ | 0.30 | $ | 10.36 | $ | 2.10 | $ | 45.29 | ||||||||
Cost of Revenues
|
0.48 | 10.31 | 3.16 | 46.40 | ||||||||||||
Gross profit (loss)
|
(0.18 | ) | 0.05 | (1.06 | ) | (1.11 | ) | |||||||||
Selling & Adm.
|
0.11 | 0.49 | 0.92 | 1.66 | ||||||||||||
Loss from operations
|
(0.29 | ) | (0.44 | ) | (1.98 | ) | (2.77 | ) | ||||||||
Other income
|
1.93 | 0.13 | 2.14 | 0.15 | ||||||||||||
Income (loss) before tax
|
1.64 | (0.31 | ) | 0.16 | (2.62 | ) | ||||||||||
Income tax expense (benefit)
|
(1.17 | ) | (0.05 | ) | (1.10 | ) | (0.77 | ) | ||||||||
Net income (loss)
|
$ | 2.81 | $ | (0.26 | ) | $ | 1.26 | $ | (1.85 | ) |
June 30,
|
September 30,
|
|||||||
2013
|
2012
|
|||||||
Accounts receivable, net
|
$ | 238 | $ | 2,853 | ||||
Costs in excess of billings
|
‐
|
403 | ||||||
Retainages receivable
|
291 | 764 | ||||||
Deferred tax asset
|
1,671 | 2,440 | ||||||
Prepaid and other current assets
|
186 | 1,348 | ||||||
Assets of discontinued operations‐current
|
2,386 | 7,808 | ||||||
Property, plant, and equipment, net
|
156 | 6,477 | ||||||
Total assets of discontinued operations
|
2,542 | 14,285 | ||||||
Accounts payable
|
1,361 | 1,745 | ||||||
Billings in excess of cost
|
‐
|
63 | ||||||
Accrued expenses and other current liabilities
|
83 | 341 | ||||||
Liabilities of discontinued operations‐current
|
1,444 | 2,149 | ||||||
Liabilities of discontinued operations‐long term
|
729 | 2,601 | ||||||
Total liabilities of discontinued operations
|
2,173 | 4,750 | ||||||
Net assets
|
$ | 369 | $ | 9,535 |
9 |
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Income (loss) from continuing operations
|
$ | 123,869 | $ | (1,742,342 | ) | $ | (292,282 | ) | $ | (2,944,537 | ) | |||||
Weighted average shares outstanding
|
14,458,836 | 14,446,836 | 14,458,836 | 14,446,836 | ||||||||||||
Earnings (loss) per share from continuing operations
|
$ | 0.009 | $ | (0.121 | ) | $ | (0.020 | ) | $ | (0.204 | ) | |||||
Income (loss) from discontinued operations
|
$ | 2,808,198 | $ | (265,263 | ) | $ | 1,265,130 | $ | (1,845,159 | ) | ||||||
Weighted average shares outstanding basic
|
14,458,836 | 14,446,836 | 14,458,836 | 14,446,836 | ||||||||||||
Earnings (loss) per share from discontinued operations
|
$ | 0.194 | $ | (0.018 | ) | $ | 0.087 | $ | (0.128 | ) | ||||||
Net income (loss)
|
$ | 2,932,067 | $ | (2,007,605 | ) | $ | 972,848 | $ | (4,789,696 | ) | ||||||
Earnings (loss) per share
|
$ | 0.203 | $ | (0.139 | ) | $ | 0.067 | $ | (0.332 | ) |
10 |
11 |
12 |
Three Months ended
|
Nine Months ended
|
|||||||
June 30, 2013
|
June 30, 2013
|
|||||||
(In Millions)
|
(In Millions)
|
|||||||
Continuing Operations
|
||||||||
Sales
|
$ | 26.55 | $ | 78.42 | ||||
Cost of revenues
|
24.13 | 71.18 | ||||||
Gross profit
|
2.42 | 7.24 | ||||||
Selling & Adm.
|
1.87 | 6.46 | ||||||
Income from operations
|
0.55 | 0.78 | ||||||
Other expense
|
(0.17 | ) | (0.84 | ) | ||||
Income (loss) before income tax
|
0.38 | (0.06 | ) | |||||
Income tax expense
|
0.25 | 0.23 | ||||||
Net income (loss) from continuing operations
|
$ | 0.13 | $ | (0.29 | ) | |||
Discontinued Operations
|
||||||||
Sales
|
$ | 0.30 | $ | 2.10 | ||||
Cost of revenues
|
0.48 | 3.16 | ||||||
Gross loss
|
(0.18 | ) | (1.06 | ) | ||||
Selling & Adm.
|
0.11 | 0.92 | ||||||
Loss from operations
|
(0.29 | ) | (1.98 | ) | ||||
Other income
|
1.92 | 2.14 | ||||||
Income before income tax
|
1.63 | 0.16 | ||||||
Income tax benefit
|
(1.17 | ) | (1.10 | ) | ||||
Income from discontinued operations
|
$ | 2.80 | $ | 1.26 |
13 |
12,000 ft 6” replacement and 14,000 ft 12” replacement
|
||||||||||||||||||||||||
At Quarter Ended
|
||||||||||||||||||||||||
9/30/2011 | 12/31/2011 | 3/31/2012 | 6/30/2012 | 9/30/2012 |
12/31/2012
|
|||||||||||||||||||
Completed
|
||||||||||||||||||||||||
Contract amount
|
$ | 8,612,000 | $ | 8,612,000 | $ | 9,100,000 | $ | 9,377,720 | $ | 9,647,650 | $ | 9,653,550 | ||||||||||||
Cost to date
|
3,212,060 | 7,566,120 | 11,699,590 | 14,047,950 | 14,606,290 | 14,650,160 | ||||||||||||||||||
Est. costs to complete
|
4,060,500 | 1,200,000 | 2,250,000 | 250,000 | 63,000 | - | ||||||||||||||||||
Est. costs at completion
|
7,272,560 | 8,766,120 | 13,949,590 | 14,297,950 | 14,669,290 | 14,650,160 | ||||||||||||||||||
Est. profit (loss)
|
$ | 1,339,440 | $ | (154,120 | ) | $ | (4,849,590 | ) | $ | (4,920,230 | ) | $ | (5,021,640 | ) | $ | (4,996,610 | ) | |||||||
Percent complete
|
44.2 | % | 86.3 | % | 83.9 | % | 98.3 | % | 99.6 | % | 100 | % |
14 |
For Quarter Ended
|
||||||||||||||||||||||||
9/30/2011
|
12/31/2011
|
3/31/2012
|
6/30/2012
|
9/30/2012 | 12/31/2012 | |||||||||||||||||||
Completed
|
||||||||||||||||||||||||
Earned revenue
|
$ | 3,803,648 | $ | 3,608,351 | $ | (562,000 | ) | $ | 2,277,720 | $ | 456,930 | $ | 68,900 | |||||||||||
Costs of revenue
|
3,212,060 | 4,354,060 | 4,133,470 | 2,348,360 | 558,340 | 43,870 | ||||||||||||||||||
Gross profit (loss)
|
$ | 591,588 | $ | (745,709 | ) | $ | (4,695,470 | ) | $ | (70,640 | ) | $ | (101,410 | ) | $ | 25,030 |
15 |
49,400 ft of 24” pipe | ||||||||||||||||||||
At Quarter Ended | ||||||||||||||||||||
12/31/2011
|
3/31/2012
|
6/30/2012
|
9/30/2012
|
12/31/2012
|
||||||||||||||||
Completed
|
||||||||||||||||||||
Contract amount
|
$ | 13,388,670 | $ | 18,946,437 | $ | 20,162,561 | $ | 21,174,380 | $ | 21,197,818 | ||||||||||
Cost to date
|
876,092 | 11,066,099 | 21,715,318 | 24,730,308 | 24,805,555 | |||||||||||||||
Est. costs to complete
|
11,977,031 | 7,673,385 | 926,944 | 25,000 | - | |||||||||||||||
Est. costs at completion
|
12,853,123 | 18,739,484 | 22,642,262 | 24,755,308 | 24,805,555 | |||||||||||||||
Est. profit (loss)
|
$ | 535,547 | $ | 206,953 | $ | (2,479,701 | ) | $ | (3,580,928 | ) | $ | (3,607,737 | ) | |||||||
Percent complete
|
6.8 | % | 59.1 | % | 95.9 | % | 99.9 | % | 100 | % | ||||||||||
For Quarter Ended
|
||||||||||||||||||||
12/31/2011
|
3/31/2012
|
6/30/2012
|
9/30/2012
|
12/31/2012
|
||||||||||||||||
Completed | ||||||||||||||||||||
Earned revenue
|
$ | 912,596 | $ | 10,275,714 | $ | 8,047,307 | $ | 1,913,764 | $ | 48,438 | ||||||||||
Costs of revenue
|
876,092 | 10,190,007 | 10,649,219 | 3,014,990 | 75,247 | |||||||||||||||
Gross profit (loss)
|
$ | 36,504 | $ | 85,707 | $ | (2,601,912 | ) | $ | (1,101,226 | ) | $ | (26,809 | ) |
16 |
17 |
18 |
19 |
20 |
In addition, on August 6, 2013, the Company issued 56 shares of Series A Preferred Stock to Marshall T. Reynolds, the Chairman of the Board of Directors of the Company, in exchange for Mr. Reynolds’ agreement to cancel and forgive the Company’s obligation under a promissory note held by Mr. Reynolds in the aggregate amount of $1,409,383 (including principal and accrued but unpaid interest). Mr. Reynolds did not receive any shares of common stock in connection with the exchange of the promissory note. Please see the Company’s Form 8-K filing on August 8, 2013 for further details.
21 |
22 |
23 |
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 |
24 |
Date: August 13, 2013 | By: | /s/ Douglas V. Reynolds | |||
Douglas V. Reynolds | |||||
Chief Executive Officer | |||||
Date: August 13, 2013 | By: | / s/ Larry A. Blount | |||
Larry A. Blount | |||||
Chief Financial Officer |
25 |
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 officers 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 officers 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 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: August 13, 2013 | /s/ | Douglas V. Reynolds | |
Douglas V. Reynolds | |||
Chief Executive Officer |
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 officers 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 officers 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 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: August 13, 2013 | /s/ | Larry A. Blount | |
Larry A. Blount | |||
Chief Financial Officer |
Date: August 13, 2013 | /s/ | Douglas V. Reynolds | |
Douglas V. Reynolds | |||
Chief Executive Officer |
Date: August 13, 2013 | /s/ | Larry A. Blount | |
Larry A. Blount | |||
Chief Financial Officer
|
1 |
BUSINESS AND ORGANIZATION (Details) (S.T. Pipeline, Inc., USD $)
|
0 Months Ended |
---|---|
May 14, 2013
|
|
S.T. Pipeline, Inc.
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Gross proceeds | $ 8,105,230 |
Commission | (709,208) |
Other auction expenses | (162,109) |
Net proceeds | 7,233,913 |
Book value of equipment | 5,325,916 |
Gain on sale | $ 1,907,997 |
CONSOLIDATED STATEMENTS OF INCOME Unaudited (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Income Statement [Abstract] | ||||
Revenue | $ 26,551,541 | $ 30,496,031 | $ 78,424,217 | $ 82,228,457 |
Cost of revenues | 24,133,642 | 30,532,221 | 71,185,726 | 78,159,235 |
Gross profit (loss) | 2,417,899 | (36,190) | 7,238,491 | 4,069,222 |
Selling and administrative expenses | 1,874,833 | 2,332,043 | 6,457,512 | 7,498,074 |
Income (loss) from operations | 543,066 | (2,368,233) | 780,979 | (3,428,852) |
Other income (expense) | ||||
Interest income | (489) | 172 | 230 | 2,534 |
Other nonoperating income (expense) | 1,109 | 2,134 | (15,898) | 4,534 |
Interest expense | (429,004) | (467,162) | (1,384,146) | (1,423,298) |
Gain on sale of equipment | 262,396 | 2,500 | 556,647 | 24,021 |
Other income (expense), Total | (165,988) | (462,356) | (843,167) | (1,392,209) |
Income (loss) from continuing operations before income taxes | 377,078 | (2,830,589) | (62,188) | (4,821,061) |
Income tax expense (benefit) | 253,209 | (1,088,247) | 230,094 | (1,876,524) |
Income (loss) from continuing operations | 123,869 | (1,742,342) | (292,282) | (2,944,537) |
Income (loss) from discontinued operations net of tax expense | 2,808,198 | (265,263) | 1,265,130 | (1,845,159) |
Net income (loss) | $ 2,932,067 | $ (2,007,605) | $ 972,848 | $ (4,789,696) |
Weighted average shares outstanding-basic (in shares) | 14,458,836 | 14,446,836 | 14,458,836 | 14,446,836 |
Earnings (loss) per share from continuing operations (in dollars per share) | $ 0.009 | $ (0.121) | $ (0.020) | $ (0.204) |
Earnings (loss) per share (in dollars per share) | $ 0.203 | $ (0.139) | $ 0.067 | $ (0.332) |
FAIR VALUE MEASUREMENTS
|
9 Months Ended |
---|---|
Jun. 30, 2013
|
|
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 $6.96 million at June 30, 2013 was $7.02 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 September 30, 2012 Form 10-K filing for further information.
|
DISCONTINUED OPERATIONS - Components of asset and liabilities that are classified as discontinued operations (Details 1) (USD $)
|
Jun. 30, 2013
|
Sep. 30, 2012
|
---|---|---|
Discontinued Operations and Disposal Groups [Abstract] | ||
Accounts receivable, net | $ 238,000 | $ 2,853,000 |
Costs in excess of billings | 403,000 | |
Retainages receivable | 291,000 | 764,000 |
Deferred tax asset | 1,671,000 | 2,440,000 |
Prepaid and other current assets | 186,000 | 1,348,000 |
Assets of discontinued operations-current | 2,386,031 | 7,808,451 |
Property, plant, and equipment, net | 155,833 | 6,477,380 |
Total assets of discontinued operations | 2,542,000 | 14,285,000 |
Accounts payable | 1,361,000 | 1,745,000 |
Billings in excess of cost | 63,000 | |
Accrued expenses and other current liabilities | 83,000 | 341,000 |
Liabilities of discontinued operations-current | 1,443,646 | 2,149,435 |
Liabilities of discontinued operations-long term | 728,981 | 2,601,229 |
Total liabilities of discontinued operations | 2,173,000 | 4,750,000 |
Net assets | $ 369,000 | $ 9,535,000 |
BUSINESS AND ORGANIZATION (Detail Textuals) (USD $)
|
0 Months Ended | 0 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Sep. 06, 2006
Warrant
Share_Warrant
|
Aug. 06, 2013
Marshall T. Reynolds
Subsequent event
|
Aug. 06, 2013
Series A Preferred Stock
Marshall T. Reynolds
Subsequent event
|
Aug. 07, 2013
Forbearance agreement
|
Jun. 30, 2013
Forbearance agreement
|
|
Agreement [Line Items] | |||||
Units issued during period | 8,600,000 | ||||
Sale of stock per unit in public offering | 6.00 | ||||
Number of shares included in each unit | 1 | ||||
Number of warrants included in unit for purchase warrants | 2 | ||||
Purchase price of common stock per share | 5.00 | ||||
Minimum amount of issuance of preferred stock | $ 6,000,000 | ||||
Minimum escrow account balance | 3,000,000 | ||||
Amount of subscription received | 3,025,000 | ||||
Repayment of principal balance of outstanding debt | 1,000,000 | ||||
Number of shares issued in exchange of cancel and forgive obligation | 56 | ||||
Aggregate amount of promissory note | $ 1,409,383 |
EARNINGS PER SHARE - Amounts used to compute earnings per share (Details) (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Earnings Per Share [Abstract] | ||||
Income (loss) from continuing operations | $ 123,869 | $ (1,742,342) | $ (292,282) | $ (2,944,537) |
Weighted average shares outstanding (in shares) | 14,458,836 | 14,446,836 | 14,458,836 | 14,446,836 |
Earnings (loss) per share from continuing operations (in dollars per share) | $ 0.009 | $ (0.121) | $ (0.020) | $ (0.204) |
Income (loss) from discontinued operations | 2,808,198 | (265,263) | 1,265,130 | (1,845,159) |
Weighted average shares outstanding basic (in shares) | 14,458,836 | 14,446,836 | 14,458,836 | 14,446,836 |
Earnings (loss) per share from discontinued operations | $ 0.194 | $ (0.018) | $ 0.087 | $ (0.128) |
Net income (loss) | $ 2,932,067 | $ (2,007,605) | $ 972,848 | $ (4,789,696) |
Earnings (loss) per share (in dollars per share) | $ 0.203 | $ (0.139) | $ 0.067 | $ (0.332) |
DISCONTINUED OPERATIONS (Detail Textuals) (S.T. Pipeline, Inc., USD $)
|
0 Months Ended |
---|---|
May 14, 2013
|
|
S.T. Pipeline, Inc.
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Net proceeds | $ 7,233,913 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Unaudited (USD $)
|
Common Stock
|
Additional Paid in Capital
|
Retained Earnings (Deficit)
|
Total
|
---|---|---|---|---|
Balance at Sep. 30, 2011 | $ 1,445 | $ 56,059,825 | $ (1,145,554) | $ 54,915,716 |
Balance (in shares) at Sep. 30, 2011 | 14,446,836 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Share-based compensation expense | 53,802 | 53,802 | ||
Net income (loss) | (4,789,696) | (4,789,696) | ||
Balance at Jun. 30, 2012 | 1,445 | 56,113,627 | (5,935,250) | 50,179,822 |
Balance (in shares) at Jun. 30, 2012 | 14,446,836 | |||
Balance at Sep. 30, 2012 | 1,446 | 56,107,650 | (49,667,731) | 6,441,365 |
Balance (in shares) at Sep. 30, 2012 | 14,458,836 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Share-based compensation expense | 28,483 | 28,483 | ||
Net income (loss) | 972,848 | 972,848 | ||
Balance at Jun. 30, 2013 | $ 1,446 | $ 56,136,133 | $ (48,694,883) | $ 7,442,696 |
Balance (in shares) at Jun. 30, 2013 | 14,458,836 |
UNCOMPLETED CONTRACTS
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Contractors [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
UNCOMPLETED CONTRACTS | 2. UNCOMPLETED CONTRACTS
Costs, estimated earnings, and billings on uncompleted contracts as of June 30, 2013 and September 30, 2012 are summarized as follows:
|
DISCONTINUED OPERATIONS
|
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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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 the wholly owned subsidiary S.T. Pipeline, Inc. The Company liquidated the assets of S.T. Pipeline on May 14, 2013. The net proceeds of $7,233,913 went to a designated bank group to reduce the balance on the Company’s Line of Credit (LOC) and term note balances.
The operating results for S.T. Pipeline, Inc. for the three and nine months ended June 30, 2013 and 2012 are as follows:
The following table shows the components of asset and liabilities that are classified as discontinued operations in the Company’s consolidated balances sheets for quarter ended June 30, 2013 and year ended September 30, 2012 (in Thousands).
|
CLAIMS
|
9 Months Ended |
---|---|
Jun. 30, 2013
|
|
Claims [Abstract] | |
CLAIMS | 3. CLAIMS
The Company reported $2.5 million of claim revenue for the period ended September 30, 2012. This claim was a result of a combination of customer-caused delays, errors in specification and designs, and disputed or unapproved contract change orders. Revenue from these claims was recorded only to the extent contract costs relating to the claim have been incurred and adjusted to reflect the probable amounts the Company anticipates collecting.
At June 30, 2013 the Company is seeking an arbitration proceeding to resolve the collection of the remaining amount. Claims receivable is a component of cost and estimated earnings in excess of billing. The Company considers collection of these claims highly probable. |