10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2015

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

For the transition period from _______________ to _________________

Commission File Number: 001-32998

Energy Services of America Corporation

(Exact Name of Registrant as Specified in Its Charter)

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

(304) 522-3868

(Registrant’s Telephone Number Including Area Code)

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

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

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

Large Accelerated Filer ¨ Accelerated Filer ¨ Non-Accelerated Filer ¨

Smaller Reporting Company   x

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 February 1, 2016, there were issued and outstanding 14,239,836 shares of the Registrant’s Common Stock.

Part 1:	Financial Information
Item 1.	Financial Statements (Unaudited):
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated  Statements of Cash Flows	3
	Consolidated Statements of Changes in Stockholders’ Equity	4
	Notes to Unaudited Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22
Part II:	Other Information	22
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 6.	Exhibits	23
Signatures		24

ITEM 1. Financial Statements

ENERGY SERVICES OF AMERICA CORPORATION

CONSOLIDATED BALANCE SHEETS

	December 31,			September 30,
Assets	2015			2015
	(Unaudited)
Current assets
Cash and cash equivalents	$	3,384,608		$	1,493,040
Accounts receivable-trade		19,624,017			21,338,455
Allowance for doubtful accounts		(147,922	)		(147,922	)
Retainages receivable		1,817,576			3,313,995
Other receivables		265,833			265,695
Costs and estimated earnings in excess of billings on uncompleted contracts		7,475,891			6,745,377
Deferred tax asset		487,570			1,126,697
Prepaid expenses and other		2,134,635			2,372,968
Assets of discontinued operations		1,727,428			1,739,324
Total current assets		36,769,636			38,247,629
Property, plant and equipment, at cost		36,681,526			33,494,845
less accumulated depreciation		(25,634,379	)		(25,075,178	)
Assets of discontinued operations, net		-			-
		11,047,147			8,419,667
Long-term notes receivable		137,281			137,281
Total assets	$	47,954,064		$	46,804,577
Liabilities and shareholders' equity
Current liabilities
Current maturities of long-term debt	$	2,488,917		$	2,376,577
Lines of credit and short term borrowings		4,250,000			4,516,235
Accounts payable		3,201,182			3,671,847
Accrued expenses and other current liabilities		4,645,073			4,301,439
Billings in excess of costs and estimated earnings on uncompleted contracts		2,462,094			2,672,294
Income tax payable		95,890			171,782
Liabilities of discontinued operations		24,513			101,409
Total current liabilities		17,167,669			17,811,583
Long-term debt, less current maturities		8,065,984			6,802,451
Deferred income taxes payable		1,812,169			1,903,907
Liabilities of discontinued operations		-			-
Total liabilities		27,045,822			26,517,941
Shareholders' equity
Preferred stock, $.0001 par value Authorized 1,000,000 shares, 206 issued at December 31, 2015 and
September 30, 2015		-			-
Common stock, $.0001 par value Authorized 50,000,000 shares 14,839,836 issued and 14,239,836 outstanding
December 31, 2015 shares and September 30, 2015		1,484			1,484
Treasury stock, 600,000 shares at December 31, 2015 and September 30, 2015		(60	)		(60	)
Additional paid in capital		61,289,260			61,289,260
Retained earnings (deficit)		(40,382,442	)		(41,004,048	)
Total shareholders' equity		20,908,242			20,286,636
Total liabilities and shareholders' equity	$	47,954,064		$	46,804,577

The Accompanying Notes are an Integral Part of These Financial Statements

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ENERGY SERVICES OF AMERICA CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

Unaudited

	Three Months Ended			Three Months Ended
	December 31,			December 31,
	2015			2014
Revenue	$	34,374,091		$	23,145,595
Cost of revenues		30,734,450			21,095,232
Gross profit		3,639,641			2,050,363
Selling and administrative expenses		2,184,626			1,838,202
Income from operations		1,455,015			212,161
Other income (expense)
Other nonoperating expense		(11,310	)		(9,279	)
Interest expense		(233,418	)		(186,156	)
Gain on sale of equipment		31,400			11,903
		(213,328	)		(183,532	)
Income from continuing operations before income taxes		1,241,687			28,629
Income tax expense		542,831			200,662
Income (loss) from continuing operations		698,856			(172,033	)
Dividends on preferred stock		77,250			77,250
Income (loss) from continuing operations available to common shareholders		621,606			(249,283	)
Income from discontinued operations net of tax benefit		-			36,842
Net income (loss) available to common shareholders	$	621,606		$	(212,441	)
Weighted average shares outstanding-basic		14,239,836			14,239,836
Weighted average shares-diluted		17,673,169			14,239,836
Earnings (loss) per share from continuing operations available to common shareholders	$	0.044		$	(0.018	)
Earnings (loss) per share from continuing operations-diluted available to common shareholders	$	0.035		$	(0.018	)
Earnings (loss) per share available to common shareholders	$	0.044		$	(0.015	)
Earnings (loss) per share-diluted available to common shareholders	$	0.035		$	(0.015	)

The Accompanying Notes are an Integral Part of These Financial Statements

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ENERGY SERVICES OF AMERICA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

	Three Months Ended			Three Months Ended
	December 31,			December 31,
Cash flows from operating activities:	2015			2014
Net income (loss) available to common shareholders	$	621,606		$	(212,441	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		595,677			864,155
Gain on sale/disposal of equipment		(31,400	)		(11,903	)
Provision for deferred taxes		551,583			109,587
Decrease in contracts receivable		1,714,438			60,933
(Increase) decrease in retainage receivable		1,496,419			(416,429	)
(Increase) decrease in other receivables		(138	)		170,232
(Increase) decrease in cost and estimated earnings in excess of billings on uncompleted contracts		(730,514	)		5,228,041
Decrease in prepaid expenses		238,333			369,830
Decrease in accounts payable		(551,010	)		(3,504,747	)
Increase (decrease) in accrued expenses		351,277			(661,687	)
Increase (decrease) in billings in excess of cost and estimated earnings on uncompleted contracts		(210,200	)		1,439,319
Decrease in income taxes payable		(80,086	)		-
Net cash provided by operating activities		3,965,985			3,434,890
Cash flows from investing activities:
Investment in property & equipment		(1,247,673	)		(370,602	)
Proceeds from sales of property and equipment		34,200			11,903
Net cash used in investing activities		(1,213,473	)		(358,699	)
Cash flows from financing activities:
Borrowings on lines of credit and short term debt, net of (repayments)		(266,235	)		(760,132	)
Principal payments on long term debt		(602,411	)		(823,361	)
Net cash used in financing activities		(868,646	)		(1,583,493	)
Increase in cash and cash equivalents		1,883,866			1,492,698
Cash beginning of period		1,511,581			2,672,268
Cash end of period	$	3,395,447		$	4,164,966
Supplemental schedule of noncash investing and financing activities:
Purchases of property & equipment under financing agreements	$	1,978,284		$	1,200,000
Supplemental disclosures of cash flows information:
Cash paid during the year for:
Interest	$	233,418		$	186,156
Income taxes	$	61,334		$	94,235
Insurance premiums	$	16,235		$	15,586
Dividends paid on preferred stock	$	154,500		$	154,500

The Accompanying Notes are an Integral Part of These Financial Statements

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ENERGY SERVICES OF AMERICA CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the three months ended December 31, 2015 and 2014

													Total
	Common Stock				Additional Paid		Retained			Treasury			Shareholders'
	Shares		Amount		in Capital		Earnings (deficit)			Stock			Equity
Balance at September 30, 2014		14,239,836	$	1,484	$	61,289,260	$	(42,835,578	)	$	(60	)	$	18,455,106
Net loss available to common shareholders		-		-		-		(212,441	)		-			(212,441	)
Balance at December 31, 2014		14,239,836	$	1,484	$	61,289,260	$	(43,048,019	)	$	(60	)	$	18,242,665
Balance at September 30, 2015		14,239,836	$	1,484	$	61,289,260	$	(41,004,048	)	$	(60	)	$	20,286,636
Net income available to common shareholders		-		-		-		621,606			-			621,606
Balance at December 31, 2015		14,239,836	$	1,484	$	61,289,260	$	(40,382,442	)	$	(60	)	$	20,908,242

The Accompanying Notes are an Integral Part of These Financial Statements

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ENERGY SERVICES OF AMERICA CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS AND ORGANIZATION:

Energy Services of America Corporation (the Company or Energy Services) was incorporated in Delaware on March 31, 2006 as a blank check company whose objective was to acquire an operating business or businesses. The Company operated as a blank check company until August 15, 2008. On that date, the Company acquired S.T. Pipeline, Inc. (S.T.) and C.J. Hughes Construction Company, Inc. (C.J. Hughes) with proceeds from the Company’s Initial Public Offering. C. J. Hughes currently operates as the Company’s sole wholly owned direct subsidiary.

S.T. was incorporated in May 1990 under the laws of the State of West Virginia and engaged in the construction of natural gas pipelines for utility companies in various states, mostly in the mid-Atlantic area of the country. On May 14, 2013, the Company liquidated the operation of S.T. and realized $1.9 million from the sale. The financial position and results of operations of S.T. have been presented as discontinued operations in the accompanying financial statements for all presented periods.

C.J. Hughes is a general contractor primarily engaged in pipeline construction for utility companies operating primarily in the mid-Atlantic region of the United States. Nitro Electric Inc. (Nitro Electric), 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 Electric 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. All of the C.J. Hughes, Nitro Electric, 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.

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

Interim Financial Statements

The accompanying unaudited 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 financial statements and footnotes thereto for the years ended September 30, 2015 and 2014 included in the Company’s Annual Report on Form 10-K filed with the SEC on December 17, 2015. 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 months ended December 31, 2015, are not necessarily indicative of the results to be expected for the full year or any other interim period.

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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 Electric and Contractors Rental. S.T. has been shown as discontinued operations for the three months ended December 31, 2015 and 2014. All significant intercompany accounts and transactions have been eliminated in consolidation. Unless the context requires otherwise, references to Energy Services include Energy Services and C.J. Hughes and C.J. Hughes’ subsidiaries.

Reclassifications

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

2. UNCOMPLETED CONTRACTS

Costs, estimated earnings, and billings on uncompleted contracts as of December 31, 2015 and September 30, 2015 are summarized as follows:

	December 31, 2015		September 30, 2015
Costs incurred on uncompleted contracts	$	118,538,080	$	124,388,637
Estimated earnings, net of estimated losses		14,954,930		17,475,207
		133,493,010		141,863,844
Less billing to date		128,479,213		137,790,761
	$	5,013,797	$	4,073,083
Costs and estimated earnings in excess of billings on uncompleted contracts	$	7,475,891	$	6,745,377
Less billings in excess of costs and estimated earnings on uncompleted contracts		2,462,094		2,672,294
	$	5,013,797	$	4,073,083

Backlog at December 31, 2015 and September 30, 2015 was $91.1 million and $71.3 million, respectively.

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3. CLAIMS

The Company does not have any claims recorded as of December 31, 2015. Claims receivable is a component of cost and estimated earnings in excess of billing.

4. FAIR VALUE MEASUREMENTS

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

Under the FASB’s authoritative guidance on fair value measurements, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Fair Value Measurements Topic of the FASB Accounting Standards Codification establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

As noted above, there is a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level 1 — Quoted prices for identical assets and liabilities traded in active exchange markets, such as the New York Stock Exchange.

Level 2 — Observable inputs other than Level 1 including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data.

Level 3 — Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also includes observable inputs for nonbinding single dealer quotes not corroborated by observable market data.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The carrying amount for borrowings under the Company’s revolving credit facility approximates fair value because of the variable market interest rate charged to the Company for these borrowings. The fair value of the Company’s long term fixed-rate debt to unrelated parties was estimated using a discounted cash flow analysis and a yield rate that was estimated based on the borrowing rates for bank loans with similar terms and maturities. The fair value of the aggregate principal amount of the Company’s fixed-rate debt of $14.8 million at December 31, 2015 was $14.6 million.

The Company uses fair value measurements on a non-recurring basis in its assessment of goodwill and long-lived assets held and used. In accordance with its annual impairment test during the quarter ended September 30, 2012, the Company recorded a goodwill impairment charge of $36.9 million, which represented the entire amount of goodwill carried on the Company’s balance sheet. Refer to Note 4, Goodwill and Intangible Assets, of the Company’s Annual Report on Form 10-K for the year ended September 30, 2015 for further information.

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5. DISCONTINUED OPERATIONS

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

The operating results for S.T. for the three months ended December 31, 2015 and 2014 are as follows:

	Three Months Ended		Three Months Ended
	December 31,		December 31,
	2015		2014
Revenue	$	-	$	-
Cost of revenues		-		-
Gross profit		-		-
Selling and administrative expenses		-		-
Income from discontinued operations		-		-
Other income (expense)
Other nonoperating income (expense)		-		-
Gain (loss) on sale of equipment		-		-
		-		-
Income before income taxes		-		-
Income tax benefit		-		(36,842	)
Net income from discontinued operations	$	-	$	36,842

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The following table shows the components of assets and liabilities that are classified as discontinued operations in the Company’s consolidated balance sheets at December 31, 2015 and at September 30, 2015.

	December 31,		September 30,
	2015		2015
Cash	$	10,839	$	18,541
Deferred tax asset		1,716,589		1,720,783
Assets of discontinued operations-current		1,727,428		1,739,324
Property, plant, and equipment, net		-		-
Total assets of discontinued operations		1,727,428		1,739,324
Accounts payable		-		80,345
Accrued expenses and other current liabilities		24,513		21,064
Liabilities of discontinued operations-current		24,513		101,409
Liabilities of discontinued operations-long term		-		-
Total liabilities of discontinued operations		24,513		101,409
Net assets	$	1,702,915	$	1,637,915

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6. EARNINGS (LOSS) PER SHARE

The amounts used to compute the earnings (loss) per share for the three months ended December 31, 2015 and 2014 are summarized below.

	Three Months Ended		Three Months Ended
	December 31,		December 31,
	2015		2014
Income (loss) from continuing operations	$	698,856	$	(172,033	)
Dividends on preferred stock		77,250		77,250
Income (loss) available to common shareholders-continuing operations	$	621,606	$	(249,283	)
Weighted average shares outstanding		14,239,836		14,239,836
Weighted average shares outstanding-diluted		17,673,169		14,239,836
Earnings (loss) per share from continuing operations available to common shareholders	$	0.044	$	(0.018	)
Earnings (loss) per share from continuing operations available to common shareholders-diluted	$	0.035	$	(0.018	)
Income from discontinued operations	$	-	$	36,842
Weighted average shares outstanding		14,239,836		14,239,836
Weighted average shares outstanding-diluted		17,673,169		14,239,836
Earnings per share from discontinued operations	$	-	$	0.003
Earnings per share from discontinued operations-diluted	$	-	$	0.003
Net income (loss)	$	698,856	$	(135,191	)
Dividends on preferred stock		77,250		77,250
Net income (loss) available to common shareholders	$	621,606	$	(212,441	)
Earnings (loss) per share available to common shareholders	$	0.044	$	(0.015	)
Earnings (loss) per share available to common shareholders-diluted	$	0.035	$	(0.015	)

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

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

Forward Looking Statements

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

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

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

Company Overview

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

Wholly owned subsidiary C.J. Hughes is a general contractor primarily engaged in pipeline construction for utility companies. C.J. Hughes operates primarily in the mid-Atlantic region of the United States. Nitro Electric, 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 Electric operates primarily in the mid-Atlantic region of the United States. Contractors Rental, a wholly owned subsidiary of C.J. Hughes provides union building trade employees for projects managed by C.J. Hughes. All of the C.J. Hughes, Nitro Electric, 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.

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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 building and replacing gas line services to individual customers of the various utility companies.

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

Columbia Gas Transmission

Columbia Gas Distribution

Rice Energy

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 completed 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.

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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.

Forbearance Agreement

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

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

On February 27, 2015, the Company entered into a financing agreement (“Line of Credit” or “LOC”) with United Bank, Inc. to provide the Company with a $10.0 million revolving line of credit. This financing agreement is in addition to the prior Term Note arrangement with United Bank and Summit Community Bank and was reported in the Company’s March 3, 2015 Current Report on Form 8-K. The Company had borrowed $4,250,000 against the Line of Credit as of December 31, 2015. The agreement replaced the $5.0 million revolving line of credit entered into with United Bank, Inc. on May 30, 2014.

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First Quarter Overview

The following is an overview of results from operations for the three months ended December 31, 2015 and 2014.

	Three Months Ended			Three Months Ended
	December 31,			December 31,
	2015			2014
Continuing Operations
Revenue	$	34,374,091		$	23,145,595
Cost of revenues		30,734,450			21,095,232
Gross profit		3,639,641			2,050,363
Selling & administrative expenses		2,184,626			1,838,202
Income from operations		1,455,015			212,161
Other expense		(213,328	)		(183,532	)
Income before tax		1,241,687			28,629
Income tax expense		542,831			200,662
Net income (loss) from continuing operations		698,856			(172,033	)
Dividends on preferred stock		77,250			77,250
Net income (loss)from continuing operations available to common shareholders	$	621,606		$	(249,283	)
Discontinued Operations
Revenue	$	-		$	-
Cost of revenues		-			-
Gross profit		-			-
Selling & administrative expenses		-			-
Income from operations		-			-
Other expense		-			-
Income before income tax		-			-
Income tax benefit		-			(36,842	)
Net income from discontinued operations	$	-		$	36,842

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Results of Operations for the Three Months Ended December 31, 2015 Compared to the Three Months Ended December 31, 2014

Revenues. Total revenues from continuing operations increased by $11.3 million or 48.5% to $34.4 million for the three months ended December 31, 2015 from $23.1 million for the same period in 2014. The increase was primarily attributable a $3.8 million revenue increase in petroleum and gas work, a $5.6 million revenue increase in electrical and mechanical services, and a $1.8 million revenue increase in water and sewer projects and other ancillary services. The Company had no revenue from discontinued operations for the three months ended December 31, 2015 and 2014.

Cost of Revenues. Total costs of revenues from continuing operations increased by $9.6 million or 45.7% to $30.7 million for the three months ended December 31, 2015 from $21.1 million for the same period in 2014. The increase was primarily attributable a $3.8 million revenue increase in petroleum and gas work, a $5.6 million revenue increase in electrical and mechanical services, and a $1.8 million revenue increase in water and sewer projects and other ancillary services. There were no cost of revenues from discontinued operations for the three months ended December 31, 2015 and 2014.

Gross Profit. Total gross profit from continuing operations increased by $1.5 million or 77.5% to $3.6 million for the three months ended December 31, 2015, compared to $2.1 million for the same period in 2014. The increase was primarily attributable a $3.8 million revenue increase in petroleum and gas work, a $5.6 million revenue increase in electrical and mechanical services, and a $1.8 million revenue increase in water and sewer projects and other ancillary services. There were no gross profits from discontinued operations for the three months ended December 31, 2015 and 2014.

Selling and administrative expenses. Total selling and administrative expenses from continuing operations increased by $346,000 or 18.9% to $2.2 million for the three months ended December 31, 2015, compared to $1.8 million for the same period in 2014. This increase was due to additional personnel needed to secure and manage new projects from customers. There were no selling and administrative expenses for discontinued operations for the three months ended December 31, 2015 and 2014. The Company believes that any ongoing costs associated with closing discontinued operations will be immaterial.

Interest Expense. Interest expense increased by $47,000 or 25.4% to $233,000 for the three months ended December 31, 2015 from $186,000 for the same period in 2014. This increase was due to increased borrowings from the line of credit for the three months ended December 31, 2015 compared to the same period in 2014.

Net Income (Loss). Income from continuing operations available to common shareholders was $622,000 for the three months ended December 31, 2015, compared to a loss of $249,000 for the same period in 2014. Income tax expense for the three months ended December 31, 2015 was $543,000 compared to income tax expense of $201,000 for the same period ended December 31, 2014 due to the increase in income before tax. There was no income from discontinued operations for the three months ended December 31, 2015 compared to net income of $37,000 for the same period in 2014, which was the result of a tax benefit.

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Comparison of Financial Condition at December 31, 2015 and September 30, 2015

The Company had total assets of $48.0 million at December 31, 2015, an increase of $1.2 million from the prior fiscal year end balance of $46.8 million. Cash and cash equivalents totaled $3.4 million at December 31, 2015, an increase of $1.9 million from the prior year end balance of $1.5 million. This increase was primarily due to the decrease of accounts receivable and retainages receivable as the Company would usually expect to see in the first fiscal year quarter after higher revenue third and fourth quarters. Accounts receivable, which totaled $19.6 million at December 31, 2015, decreased by $1.7 million from the prior year end balance of $21.3 million. Retainages receivable totaled $1.8 million at December 31, 2015, a decrease of $1.5 million from the prior year end balance of $3.3 million. The Company also had net fixed assets of $11.0 million at December 31, 2015, an increase of $2.6 million from prior year end balance of $8.4 million. The increase resulted from the purchase of the Company’s fabrication shop for $1.1 million, which it previously leased, and operating equipment purchases of $1.5 million. Estimated earnings in excess of billings on uncompleted contracts totaled $7.5 million at December 31, 2015, an increase of $731,000 from the prior year end balance of $6.7 million.

The Company had total liabilities of $27.0 million at December 31, 2015, an increase of $528,000 from the prior year end balance of $26.6 million due to an increase in long-term debt offset by a decrease in short-term debt. Long-term debt totaled $8.1 million at December 31, 2015, an increase of $1.3 million from the prior year end balance of $6.8 million. The increase in long term debt was due to the purchase of the Company’s fabrication shop which was previously leased by Nitro Electric. Current maturities of long-term debt totaled $2.5 million at December 31, 2015, an increase of $112,000 from the prior year end balance of $2.4 million. Lines of credit and short term borrowings totaled $4.3 million at December 31, 2015, a decrease of $266,000 from the prior year end balance of $4.5 million. In total, short-term debt at December 31, 2015 was $6.7 million, a decrease of $153,000 from the prior year end balance of $6.9 million. Accounts payable and accrued expenses totaled $7.8 million at December 31, 2015, a decrease of $127,000 from the prior year end balance of $8.0 million.

Shareholders’ equity was $20.9 million at December 31, 2015, an increase of $622,000 from the prior year end balance of $20.3 million. This increase was due to the net income of $699,000 for the three months ended December 31, 2015 and offset by $77,250 for accrued dividends on preferred stock during the same time period.

Liquidity and Capital Resources

Indebtedness

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

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

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

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

3. Minimum current ratio of 1.30x to be measured quarterly

4. Maximum debt to tangible net worth ratio (“TNW”) to be measured semi-annually on the following basis:

Date	Debt to TNW
12/31/2015	1.75x
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 future periods.  The Company is in compliance with all loan covenants as of December 31, 2015.

On December 16, 2014, the Company’s Nitro Electric 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 the new loan agreement is 4.75% with monthly payments of $7,800.

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 new agreement has an interest rate of 5.0% and is subject to the terms of the January 31, 2014 Term Note agreement discussed above.

Also 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, 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 line of credit will be converted to a five year term note agreement with an interest rate of 5.0%. This agreement is subject to the terms of the January 31, 2014 Term Note agreement discussed above. At December 31, 2015, the Company had borrowed $858,000 against this line of credit.

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 Electric had previously been leasing for $12,900 monthly. The interest rate on the new loan agreement is 4.25% with monthly payments of $11,500.

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Line of Credit

On February 27, 2015, the Company entered into a financing agreement (the “Line of Credit” or “LOC”) with United Bank, Inc. to provide the Company with a $10.0 million revolving line of credit. This financing agreement is in addition to the Term Note arrangement with United Bank and Summit Community Bank. This was reported in the Company’s March 3, 2015 Current Report on Form 8-K.

The LOC is subject to the terms of the January 31, 2014 Term Note agreement discussed above. Interest on the LOC, which expires on February 27, 2016, is 6.0%. Cash available under the line is calculated based on a percentage of the Company’s accounts receivable with certain exclusions. Major items excluded from the calculation are certain percentages of receivables from bonded jobs and retainage as well as items greater than 120 days old. At December 31, 2015, the Company had $4,250,000 of outstanding borrowings on the LOC.

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 facilities, equipment and vehicles. These leases usually are short term in nature, with a duration of one year or less, though at times we may enter into longer term leases when warranted. By leasing equipment, vehicles and facilities, 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 December 31, 2015, the Company had operating lease commitments of $121,000 with various expiration dates through May 2018.

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 December 31, 2015, 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 amount of contracts that can be bid.

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Depending upon the size and conditions of a particular contract, the Company may be required to post letters of credit or other collateral in favor of the insurer. Posting of these letters or other collateral will reduce our borrowing capabilities. The Company does not anticipate any claims against outstanding performance bonds in the foreseeable future. At December 31, 2015, the Company had $27.5 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 two customers that exceeded 10% of revenues for the three months ended December 31, 2015. The two customers, Marathon Petroleum and Rice Energy, represented 14.1% and 15.3% of revenues, respectively. No customers accounted for more than 10% of receivables net of retention at December 31, 2015. The Company had three customers that exceeded 10% of revenues for the three months ended December 31, 2014. These three customers, Dow Chemical, Rice Energy, and Marathon Petroleum, represented 10.4%, 10.1% and 19.8% of revenues, respectively. Three customers accounted for more than 10% of receivables net of retention at December 31, 2014. These customers, Bayer Crop Science, Rice Energy, and Marathon Petroleum, represented 13.5%, 19.0%, and 10.0% of receivables, respectively.

The Company’s consolidated operating revenues for the three months ended December 31, 2015 were $34.4 million of which 42.2% was attributable to gas and petroleum contract work, 46.4% to electrical and mechanical contract services and 11.4% to water and sewer contract installations and other ancillary services. The Company’s consolidated operating revenues for the three months ended December 31, 2014 were $23.1 million of which 46.2% was attributable to gas and petroleum contract work, 44.8% to electrical and mechanical contract services and 9.0% to water and sewer contract installations and other ancillary services.

Litigation

The Company is a party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract and/or property damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to all such lawsuits, claims, and proceedings, we record reserves when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. At December 31, 2015, 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.

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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.

There were no material related party transactions during the three months ended December 31, 2015.

Inflation

Due to relatively low levels of inflation during the three months ended December 31, 2015 and 2014, 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.

Claims. Claims are amounts in excess of the agreed contract price that a contractor seeks to collect from customers or others for customer-caused delays, errors in specifications and designs, contract terminations, change orders in dispute or unapproved as to both scope and price, or other causes of unanticipated additional costs. The Company records revenue on claims that have a high probability of success. Revenue from a claim is recorded only to the extent that contract costs relating to the claim have been incurred.

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

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Self Insurance. The Company carries workers’ compensation, general liability and auto insurance through a captive insurance company. While the Company believes that this arrangement has been beneficial in reducing and stabilizing insurance costs, the Company does have to maintain a restricted cash account to guarantee payments of premiums. That restricted account had a balance of $1.6 million as of December 31, 2015. Should the Company experience severe losses over an extended period, it could have a detrimental effect on the Company, notwithstanding the captive insurance 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 December 31, 2015, management concluded that the allowance for doubtful accounts was adequate.

Outlook

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

On January 31, 2014, the Company entered into a financing arrangement with United Bank, Inc. (West Virginia) and Summit Community Bank (West Virginia). The amount of the financing arrangement is for $8.8 million. In addition, the Company entered into a separate loan arrangement with First Guaranty Bank (Louisiana) for $1.6 million. Taken together, the $10.4 million in new financings supersede the prior financing arrangements the Company had with United Bank as well as the other lenders. As a result of entering into the new financings, United Bank and the other lenders of the Company agreed to terminate a pre-existing Forbearance Agreement with the Company.

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 an existing Line of Credit with United Bank, Inc. will be adequate to meet our cash needs for Company’s fiscal year. The Company may borrow against the line of credit provided it meets certain borrowing base requirements, with $10.0 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. At December 31, 2015, the Company had borrowed $4.3 million against the Line of Credit.

Prior to the general economic crisis in 2009, our customers were experiencing high demand for their products, particularly natural gas. Currently, as the Company is experiencing increased demand for its services and accordingly, the Company would expect to see projected spending for our customers on their transmission and distribution systems increasing dramatically over the next few years. However, with potential uncertainties in the economy, for example a long term reduction in the price of oil, the demand for our customers’ projects could wane and their ability to fund planned projects could be reduced. The Company’s backlog at December 31, 2015 was $91.1 million. Additionally, in January 2016, the Company received notice of award for two petroleum related projects totaling approximately $18.0 million, with work scheduled to begin in June 2016. While adding additional business 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.

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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 first quarter of fiscal year 2016 that has materially affected, or is reasonably likely to materially affect, Energy Services of America Corporation’s internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. Legal Proceedings

The Company is a party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract and/or property damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to all such lawsuits, claims, and proceedings, we record reserves when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. At December 31, 2015, we do not believe that any of these proceedings, separately or in aggregate, would be expected to have a material adverse effect on our financial position, results of operations or cash flows.

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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 17, 2015. 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 periods covered by the report.

(b) None.

(c) Energy Services of America Corporation did not repurchase any shares of its common stock during the relevant period.

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

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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: February 11, 2016	By:	/s/ Douglas V. Reynolds
	Douglas V. Reynolds
	Chief Executive Officer
Date: February 11, 2016	By:	/s/ Charles P. Crimmel
	Charles P. Crimmel
	Chief Financial Officer

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EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

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

I, Douglas V. Reynolds, certify that:

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

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

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

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

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

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

Date: February 11, 2016	/s/ Douglas V. Reynolds
	Douglas V. Reynolds
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

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

I, Charles P. Crimmel, certify that:

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

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

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

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

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

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

Date: February 11, 2016	/s/ Charles P. Crimmel
	Charles P. Crimmel
	Chief Financial Officer

EX-32

Exhibit 32

Certification pursuant to

18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

Douglas V. Reynolds, Chief Executive Officer and Charles P. Crimmel, Chief Financial Officer of Energy Services of America Corporation (the “Company”) each certify in their capacity as officers of the Company that they have reviewed this Quarterly Report on Form 10-Q for the quarter ended December 31, 2015, and that to the best of their knowledge:

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

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

Date: February 11, 2016	/s/ Douglas V. Reynolds
	Douglas V. Reynolds
	Chief Executive Officer
Date: February 11, 2016	/s/ Charles P. Crimmel
	Charles P. Crimmel
	Chief Financial Officer

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Document and Entity Information - shares	3 Months Ended
	Dec. 31, 2015	Jan. 01, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	Energy Services of America CORP
Entity Central Index Key	0001357971
Trading Symbol	esoa
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		14,239,836
Document Type	10-Q
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1

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CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2015	Sep. 30, 2015
Current assets
Cash and cash equivalents	$ 3,384,608	$ 1,493,040
Accounts receivable-trade	19,624,017	21,338,455
Allowance for doubtful accounts	(147,922)	(147,922)
Retainages receivable	1,817,576	3,313,995
Other receivables	265,833	265,695
Costs and estimated earnings in excess of billings on uncompleted contracts	7,475,891	6,745,377
Deferred tax asset	487,570	1,126,697
Prepaid expenses and other	2,134,635	2,372,968
Assets of discontinued operations	1,727,428	1,739,324
Total current assets	36,769,636	38,247,629
Property, plant and equipment, at cost	36,681,526	33,494,845
less accumulated depreciation	$ (25,634,379)	$ (25,075,178)
Assets of discontinued operations, net
Total Property, plant and equipment	$ 11,047,147	$ 8,419,667
Long-term notes receivable	137,281	137,281
Total assets	47,954,064	46,804,577
Current liabilities
Current maturities of long-term debt	2,488,917	2,376,577
Lines of credit and short term borrowings	4,250,000	4,516,235
Accounts payable	3,201,182	3,671,847
Accrued expenses and other current liabilities	4,645,073	4,301,439
Billings in excess of costs and estimated earnings on uncompleted contracts	2,462,094	2,672,294
Income tax payable	95,890	171,782
Liabilities of discontinued operations	24,513	101,409
Total current liabilities	17,167,669	17,811,583
Long-term debt, less current maturities	8,065,984	6,802,451
Deferred income taxes payable	$ 1,812,169	$ 1,903,907
Liabilities of discontinued operations
Total liabilities	$ 27,045,822	$ 26,517,941
Shareholders' equity
Preferred stock, $.0001 par value Authorized 1,000,000 shares, 206 issued at December 31, 2015 and September 30, 2015
Common stock, $.0001 par value Authorized 50,000,000 shares 14,839,836 issued and 14,239,836 outstanding December 31, 2015 and September 30, 2015	$ 1,484	$ 1,484
Treasury stock, 600,000 shares at December 31, 2015 and September 30, 2015	(60)	(60)
Additional paid in capital	61,289,260	61,289,260
Retained earnings (deficit)	(40,382,442)	(41,004,048)
Total shareholders' equity	20,908,242	20,286,636
Total liabilities and shareholders' equity	$ 47,954,064	$ 46,804,577

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CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares	Dec. 31, 2015	Sep. 30, 2015
Statement Of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	206	206
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	14,839,836	14,839,836
Common stock, shares outstanding	14,239,836	14,239,836
Treasury stock, shares	600,000	600,000

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CONSOLIDATED STATEMENTS OF INCOME Unaudited - USD ($)	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Income Statement [Abstract]
Revenue	$ 34,374,091	$ 23,145,595
Cost of revenues	30,734,450	21,095,232
Gross profit	3,639,641	2,050,363
Selling and administrative expenses	2,184,626	1,838,202
Income from operations	1,455,015	212,161
Other income (expense)
Other nonoperating expense	(11,310)	(9,279)
Interest expense	(233,418)	(186,156)
Gain on sale of equipment	31,400	11,903
Other income (expense), total	(213,328)	(183,532)
Income from continuing operations before income taxes	1,241,687	28,629
Income tax expense	542,831	200,662
Income (loss) from continuing operations	698,856	(172,033)
Dividends on preferred stock	77,250	77,250
Income (loss) from continuing operations available to common shareholders	621,606	(249,283)
Income from discontinued operations net of tax benefit		36,842
Net income (loss) available to common shareholders	$ 621,606	$ (212,441)
Weighted average shares outstanding-basic (in shares)	14,239,836	14,239,836
Weighted average shares-diluted (in shares)	17,673,169	14,239,836
Earnings (loss) per share from continuing operations available to common shareholders (in dollars per share)	$ 0.044	$ (0.018)
Earnings (loss) per share from continuing operations-diluted available to common shareholders (in dollars per share)	0.035	(0.018)
Earnings (loss) per share available to common shareholders (in dollars per share)	0.044	(0.015)
Earnings (loss) per share-diluted available to common shareholders (in dollars per share)	$ 0.035	$ (0.015)

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CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited - USD ($)	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities:
Net income (loss) available to common shareholders	$ 621,606	$ (212,441)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	595,677	864,155
Gain on sale/disposal of equipment	(31,400)	(11,903)
Provision for deferred taxes	551,583	109,587
Decrease in contracts receivable	1,714,438	60,933
(Increase) decrease in retainage receivable	1,496,419	(416,429)
(Increase) decrease in other receivables	(138)	170,232
(Increase) decrease in cost and estimated earnings in excess of billings on uncompleted contracts	(730,514)	5,228,041
Decrease in prepaid expenses	238,333	369,830
Decrease in accounts payable	(551,010)	(3,504,747)
Increase (decrease) in accrued expenses	351,277	(661,687)
Increase (decrease) in billings in excess of cost and estimated earnings on uncompleted contracts	(210,200)	1,439,319
Decrease in income taxes payable	(80,086)
Net cash provided by operating activities	3,965,985	3,434,890
Cash flows from investing activities:
Investment in property & equipment	(1,247,673)	(370,602)
Proceeds from sales of property and equipment	34,200	11,903
Net cash used in investing activities	(1,213,473)	(358,699)
Cash flows from financing activities:
Borrowings on lines of credit and short term debt, net of (repayments)	(266,235)	(760,132)
Principal payments on long term debt	(602,411)	(823,361)
Net cash used in financing activities	(868,646)	(1,583,493)
Increase in cash and cash equivalents	1,883,866	1,492,698
Cash beginning of period	1,511,581	2,672,268
Cash end of period	3,395,447	4,164,966
Supplemental schedule of noncash investing and financing activities:
Purchases of property & equipment under financing agreements	1,978,284	1,200,000
Cash paid during the year for:
Interest	233,418	186,156
Income taxes	61,334	94,235
Insurance premiums	16,235	15,586
Dividends paid on preferred stock	$ 154,500	$ 154,500

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($)	Common Stock	Additional Paid in Capital	Retained Earnings (deficit)	Treasury Stock	Total
Balance at Sep. 30, 2014	$ 1,484	$ 61,289,260	$ (42,835,578)	$ (60)	$ 18,455,106
Balance (in shares) at Sep. 30, 2014	14,239,836
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) available to common shareholders			(212,441)		(212,441)
Balance at Dec. 31, 2014	$ 1,484	61,289,260	(43,048,019)	(60)	18,242,665
Balance (in shares) at Dec. 31, 2014	14,239,836
Balance at Sep. 30, 2015	$ 1,484	61,289,260	(41,004,048)	(60)	20,286,636
Balance (in shares) at Sep. 30, 2015	14,239,836
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss) available to common shareholders			621,606		621,606
Balance at Dec. 31, 2015	$ 1,484	$ 61,289,260	$ (40,382,442)	$ (60)	$ 20,908,242
Balance (in shares) at Dec. 31, 2015	14,239,836

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BUSINESS AND ORGANIZATION

3 Months Ended

Dec. 31, 2015

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

BUSINESS AND ORGANIZATION

1. BUSINESS AND ORGANIZATION:

Energy Services of America Corporation (the Company or Energy Services) was incorporated in Delaware on March 31, 2006 as a blank check company whose objective was to acquire an operating business or businesses. The Company operated as a blank check company until August 15, 2008. On that date, the Company acquired S.T. Pipeline, Inc. (S.T.) and C.J. Hughes Construction Company, Inc. (C.J. Hughes) with proceeds from the Company’s Initial Public Offering. C. J. Hughes currently operates as the Company’s sole wholly owned direct subsidiary.

S.T. was incorporated in May 1990 under the laws of the State of West Virginia and engaged in the construction of natural gas pipelines for utility companies in various states, mostly in the mid-Atlantic area of the country. On May 14, 2013, the Company liquidated the operation of S.T. and realized $1.9 million from the sale. The financial position and results of operations of S.T. have been presented as discontinued operations in the accompanying financial statements for all presented periods.

C.J. Hughes is a general contractor primarily engaged in pipeline construction for utility companies operating primarily in the mid-Atlantic region of the United States. Nitro Electric Inc. (Nitro Electric), 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 Electric 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. All of the C.J. Hughes, Nitro Electric, 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.

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

Interim Financial Statements

The accompanying unaudited 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 financial statements and footnotes thereto for the years ended September 30, 2015 and 2014 included in the Company’s Annual Report on Form 10-K filed with the SEC on December 17, 2015. 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 months ended December 31, 2015, 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 Electric and Contractors Rental. S.T. has been shown as discontinued operations for the three months ended December 31, 2015 and 2014. All significant intercompany accounts and transactions have been eliminated in 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.

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UNCOMPLETED CONTRACTS

3 Months Ended

Dec. 31, 2015

Contractors [Abstract]

UNCOMPLETED CONTRACTS

2. UNCOMPLETED CONTRACTS

Costs, estimated earnings, and billings on uncompleted contracts as of December 31, 2015 and September 30, 2015 are summarized as follows:

	December 31, 2015		September 30, 2015
Costs incurred on uncompleted contracts	$	118,538,080	$	124,388,637
Estimated earnings, net of estimated losses		14,954,930		17,475,207
		133,493,010		141,863,844
Less billing to date		128,479,213		137,790,761
	$	5,013,797	$	4,073,083
Costs and estimated earnings in excess of billings on uncompleted contracts	$	7,475,891	$	6,745,377
Less billings in excess of costs and estimated earnings on uncompleted contracts		2,462,094		2,672,294
	$	5,013,797	$	4,073,083

Backlog at December 31, 2015 and September 30, 2015 was $91.1 million and $71.3 million, respectively.

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CLAIMS

3 Months Ended

Dec. 31, 2015

Claims [Abstract]

CLAIMS

3. CLAIMS

The Company does not have any claims recorded as of December 31, 2015. Claims receivable is a component of cost and estimated earnings in excess of billing.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Dec. 31, 2015

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 $14.8 million at December 31, 2015 was $14.6 million.

The Company uses fair value measurements on a non-recurring basis in its assessment of goodwill and long-lived assets held and used. In accordance with its annual impairment test during the quarter ended September 30, 2012, the Company recorded a goodwill impairment charge of $36.9 million, which represented the entire amount of goodwill carried on the Company’s balance sheet. Refer to Note 4, Goodwill and Intangible Assets, of the Company’s Annual Report on Form 10-K for the year ended September 30, 2015 for further information.

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DISCONTINUED OPERATIONS

3 Months Ended

Dec. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

5. DISCONTINUED OPERATIONS

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

The operating results for S.T. for the three months ended December 31, 2015 and 2014 are as follows:

	Three Months Ended		Three Months Ended
	December 31,		December 31,
	2015		2014
Revenue	$	-	$	-
Cost of revenues		-		-
Gross profit		-		-
Selling and administrative expenses		-		-
Income from discontinued operations		-		-
Other income (expense)
Other nonoperating income (expense)		-		-
Gain (loss) on sale of equipment		-		-
		-		-
Income before income taxes		-		-
Income tax benefit		-		(36,842	)
Net income from discontinued operations	$	-	$	36,842

The following table shows the components of assets and liabilities that are classified as discontinued operations in the Company’s consolidated balance sheets at December 31, 2015 and at September 30, 2015.

	December 31,		September 30,
	2015		2015
Cash	$	10,839	$	18,541
Deferred tax asset		1,716,589		1,720,783
Assets of discontinued operations-current		1,727,428		1,739,324
Property, plant, and equipment, net		-		-
Total assets of discontinued operations		1,727,428		1,739,324
Accounts payable		-		80,345
Accrued expenses and other current liabilities		24,513		21,064
Liabilities of discontinued operations-current		24,513		101,409
Liabilities of discontinued operations-long term		-		-
Total liabilities of discontinued operations		24,513		101,409
Net assets	$	1,702,915	$	1,637,915

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EARNINGS (LOSS) PER SHARE

3 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

6. EARNINGS (LOSS) PER SHARE

The amounts used to compute the earnings (loss) per share for the three months ended December 31, 2015 and 2014 are summarized below.

	Three Months Ended		Three Months Ended
	December 31,		December 31,
	2015		2014
Income (loss) from continuing operations	$	698,856	$	(172,033	)
Dividends on preferred stock		77,250		77,250
Income (loss) available to common shareholders-continuing operations	$	621,606	$	(249,283	)
Weighted average shares outstanding		14,239,836		14,239,836
Weighted average shares outstanding-diluted		17,673,169		14,239,836
Earnings (loss) per share from continuing operations available to common shareholders	$	0.044	$	(0.018	)
Earnings (loss) per share from continuing operations available to common shareholders-diluted	$	0.035	$	(0.018	)
Income from discontinued operations	$	-	$	36,842
Weighted average shares outstanding		14,239,836		14,239,836
Weighted average shares outstanding-diluted		17,673,169		14,239,836
Earnings per share from discontinued operations	$	-	$	0.003
Earnings per share from discontinued operations-diluted	$	-	$	0.003
Net income (loss)	$	698,856	$	(135,191	)
Dividends on preferred stock		77,250		77,250
Net income (loss) available to common shareholders	$	621,606	$	(212,441	)
Earnings (loss) per share available to common shareholders	$	0.044	$	(0.015	)
Earnings (loss) per share available to common shareholders-diluted	$	0.035	$	(0.015	)

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UNCOMPLETED CONTRACTS (Tables)

3 Months Ended

Dec. 31, 2015

Contractors [Abstract]

Schedule of costs, estimated earnings and billings on uncompleted contracts

	December 31, 2015		September 30, 2015
Costs incurred on uncompleted contracts	$	118,538,080	$	124,388,637
Estimated earnings, net of estimated losses		14,954,930		17,475,207
		133,493,010		141,863,844
Less billing to date		128,479,213		137,790,761
	$	5,013,797	$	4,073,083
Costs and estimated earnings in excess of billings on uncompleted contracts	$	7,475,891	$	6,745,377
Less billings in excess of costs and estimated earnings on uncompleted contracts		2,462,094		2,672,294
	$	5,013,797	$	4,073,083

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DISCONTINUED OPERATIONS (Tables)

3 Months Ended

Dec. 31, 2015

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Schedule of operating results and components of assets and liabilities classified as discontinued operations

	December 31,		September 30,
	2015		2015
Cash	$	10,839	$	18,541
Deferred tax asset		1,716,589		1,720,783
Assets of discontinued operations-current		1,727,428		1,739,324
Property, plant, and equipment, net		-		-
Total assets of discontinued operations		1,727,428		1,739,324
Accounts payable		-		80,345
Accrued expenses and other current liabilities		24,513		21,064
Liabilities of discontinued operations-current		24,513		101,409
Liabilities of discontinued operations-long term		-		-
Total liabilities of discontinued operations		24,513		101,409
Net assets	$	1,702,915	$	1,637,915

S.T. Pipeline, Inc.

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Schedule of operating results and components of assets and liabilities classified as discontinued operations

	Three Months Ended		Three Months Ended
	December 31,		December 31,
	2015		2014
Revenue	$	-	$	-
Cost of revenues		-		-
Gross profit		-		-
Selling and administrative expenses		-		-
Income from discontinued operations		-		-
Other income (expense)
Other nonoperating income (expense)		-		-
Gain (loss) on sale of equipment		-		-
		-		-
Income before income taxes		-		-
Income tax benefit		-		(36,842	)
Net income from discontinued operations	$	-	$	36,842

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EARNINGS (LOSS) PER SHARE (Tables)

3 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Schedule of basic and diluted earnings per share

	Three Months Ended		Three Months Ended
	December 31,		December 31,
	2015		2014
Income (loss) from continuing operations	$	698,856	$	(172,033	)
Dividends on preferred stock		77,250		77,250
Income (loss) available to common shareholders-continuing operations	$	621,606	$	(249,283	)
Weighted average shares outstanding		14,239,836		14,239,836
Weighted average shares outstanding-diluted		17,673,169		14,239,836
Earnings (loss) per share from continuing operations available to common shareholders	$	0.044	$	(0.018	)
Earnings (loss) per share from continuing operations available to common shareholders-diluted	$	0.035	$	(0.018	)
Income from discontinued operations	$	-	$	36,842
Weighted average shares outstanding		14,239,836		14,239,836
Weighted average shares outstanding-diluted		17,673,169		14,239,836
Earnings per share from discontinued operations	$	-	$	0.003
Earnings per share from discontinued operations-diluted	$	-	$	0.003
Net income (loss)	$	698,856	$	(135,191	)
Dividends on preferred stock		77,250		77,250
Net income (loss) available to common shareholders	$	621,606	$	(212,441	)
Earnings (loss) per share available to common shareholders	$	0.044	$	(0.015	)
Earnings (loss) per share available to common shareholders-diluted	$	0.035	$	(0.015	)

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BUSINESS AND ORGANIZATION (Detail Textuals) $ in Millions	May. 14, 2013 USD ($)
S.T. Pipeline, Inc.
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net income (loss)	$ 1.9

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UNCOMPLETED CONTRACTS - Costs, estimated earnings, and billings on uncompleted contracts (Details) - USD ($)	Dec. 31, 2015	Sep. 30, 2015
Contractors [Abstract]
Costs incurred on uncompleted contracts	$ 118,538,080	$ 124,388,637
Estimated earnings, net of estimated losses	14,954,930	17,475,207
Costs of uncompleted contracts including net estimated earnings	133,493,010	141,863,844
Less billing to date	128,479,213	137,790,761
Unbilled contracts receivable	5,013,797	4,073,083
Costs and estimated earnings in excess of billings on uncompleted contracts	7,475,891	6,745,377
Less billings in excess of costs and estimated earnings on uncompleted contracts	2,462,094	2,672,294
Unbilled contracts receivable	$ 5,013,797	$ 4,073,083

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UNCOMPLETED CONTRACTS (Detail Textuals) - USD ($) $ in Millions	Dec. 31, 2015	Sep. 30, 2015
Contractors [Abstract]
Backlog of uncompleted contracts	$ 91.1	$ 71.3

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FAIR VALUE MEASUREMENTS (Detail Textuals) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2012	Dec. 31, 2015
Fair Value Disclosures [Abstract]
Aggregate principal amount of fixed-rate debt		$ 14.8
Fair value of company's fixed rate debt		$ 14.6
Goodwill impairment charge	$ 36.9

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DISCONTINUED OPERATIONS - Operating results for S.T. Pipeline, Inc. (Details) - S.T. Pipeline, Inc. - USD ($)		3 Months Ended
	May. 14, 2013	Dec. 31, 2015	Dec. 31, 2014
Other income (expense)
Net income from discontinued operations	$ 1,900,000
Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Revenue
Cost of revenues
Gross profit
Selling and administrative expenses
Income from discontinued operations
Other income (expense)
Other nonoperating income (expense)
Gain (loss) on sale of equipment
Other income (expense), before income tax
Income before income taxes
Income tax benefit			$ (36,842)
Net income from discontinued operations			$ 36,842

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DISCONTINUED OPERATIONS - Components of asset and liabilities that are classified as discontinued operations (Details 1) - USD ($)	Dec. 31, 2015	Sep. 30, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Assets of discontinued operations-current	$ 1,727,428	$ 1,739,324
Liabilities of discontinued operations-current	$ 24,513	$ 101,409
Liabilities of discontinued operations-long term
S.T. Pipeline, Inc. | Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cash	$ 10,839	$ 18,541
Deferred tax asset	1,716,589	1,720,783
Assets of discontinued operations-current	$ 1,727,428	$ 1,739,324
Property, plant, and equipment, net
Total assets of discontinued operations	$ 1,727,428	$ 1,739,324
Accounts payable		80,345
Accrued expenses and other current liabilities	24,513	21,064
Liabilities of discontinued operations-current	$ 24,513	$ 101,409
Liabilities of discontinued operations-long term
Total liabilities of discontinued operations	$ 24,513	$ 101,409
Net assets	$ 1,702,915	$ 1,637,915

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DISCONTINUED OPERATIONS (Detail Textuals) $ in Millions	May. 14, 2013 USD ($)
S.T. Pipeline, Inc.
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net income (loss)	$ 1.9

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EARNINGS (LOSS) PER SHARE - Amounts used to compute earnings per share (Details) - USD ($)	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Earnings Per Share [Abstract]
Income (loss) from continuing operations	$ 698,856	$ (172,033)
Dividends on preferred stock	77,250	77,250
Income (loss) available to common shareholders-continuing operations	$ 621,606	$ (249,283)
Weighted average shares outstanding (in shares)	14,239,836	14,239,836
Weighted average shares outstanding-diluted (in shares)	17,673,169	14,239,836
Earnings (loss) per share from continuing operations available to common shareholders (in dollars per share)	$ 0.044	$ (0.018)
Earnings (loss) per share from continuing operations available to common shareholders-diluted (in dollars per share)	$ 0.035	$ (0.018)
Income from discontinued operations		$ 36,842
Weighted average shares outstanding (in shares)	14,239,836	14,239,836
Weighted average shares outstanding-diluted (in shares)	17,673,169	14,239,836
Earnings per share from discontinued operations (in dollars per share)		$ 0.003
Earnings per share from discontinued operations-diluted (in dollars per share)		$ 0.003
Net income (loss)	$ 698,856	$ (135,191)
Dividends on preferred stock	77,250	77,250
Net income (loss) available to common shareholders	$ 621,606	$ (212,441)
Earnings (loss) per share available to common shareholders (in dollars per share)	$ 0.044	$ (0.015)
Earnings (loss) per share available to common shareholders-diluted (in dollars per share)	$ 0.035	$ (0.015)