Energy Services of America CORP

1. BUSINESS AND ORGANIZATION

Energy Services of America Corporation (“Energy Services” or the “Company”), formed in 2006, is a contractor and service company that operates primarily in the mid-Atlantic and central regions of the United States and provides services to customers in the natural gas, petroleum, water distribution, automotive, chemical, and power industries. 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 pipeline services include corrosion protection services, horizontal drilling services, 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 Company has also added the ability to install broadband and solar electric systems and perform civil and general contracting services.

Segments

Energy Services’reportable segments are: Underground Infrastructure Construction, Industrial Construction, and Building Construction.

Underground Infrastructure Construction primarily includes new construction and maintenance work in the following areas: water and wastewater pipelines, natural gas distribution pipelines, natural gas transmission pipelines, natural gas stations and ancillary facilities, corrosion protection services, and horizontal drilling services.

Industrial Construction primarily includes new construction and maintenance work in the following areas: electrical, mechanical, HVAC/R, controls, and fire protection services in automotive, chemical, power, and manufacturing facilities.

Building Construction primarily includes new construction and rehabilitation activities in the following areas: school projects, local and state building projects, and small bridge projects. Most services performed by the legal entity in this segment are subcontracted both to outside contractors and internally to other legal entities within the Company. Services subcontracted internally are eliminated from segmented reporting.

Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto for the years ended September 30, 2025, and 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on December 15, 2025. 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 (“U.S. GAAP”) have been omitted pursuant to the interim financial reporting rules and regulations of the SEC. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the Company’s financial position and results of operations. The operating results for the three and nine months ended June 30, 2026 and 2025 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, its wholly owned subsidiaries West Virginia Pipeline, SQP, Ryan Construction, Tri-State Paving, Tribute and C.J. Hughes and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidation. Unless the context requires otherwise, references to Energy Services include Energy Services, West Virginia Pipeline, SQP, Ryan Construction, Tri-State Paving, Tribute, and C.J. Hughes and its subsidiaries.

Use of Estimates and Assumptions

The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and loss during the reporting period. Actual results could differ materially from those estimates.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Please refer to Note 2 “Summary of Significant Accounting Policies” of the consolidated financial statements in our Annual Report on Form 10-K for the year ended September 30, 2025, for a more detailed discussion of our significant accounting policies. There were no material changes to these significant accounting policies during the nine months ended June 30, 2026.

3. ACCOUNTING FOR PAYCHECK PROTECTION PROGRAM LOANS

Due to the economic uncertainties created by COVID-19 and limited operating funds available, the Company applied for loans under the Paycheck Protection Program (“PPP”). On April 15, 2020, the Company and its subsidiaries, C.J. Hughes, Contractors Rental and Nitro, entered into separate PPP notes effective April 7, 2020, with United Bank as its lender (the “Lender”) in an aggregate principal amount of $13.1 million pursuant to the PPP (collectively, the (“PPP Loans”). In a special meeting held on April 27, 2020, the Board of Directors of the Company unanimously voted to return $3.3 million of the PPP Loans after discussing the financing needs of the Company and subsidiaries. That left the Company and subsidiaries with $9.8 million in PPP Loans to fund operations. During fiscal year 2021, the Company received notice that the SBA had granted forgiveness of the $9.8 million of PPP Loans and the SBA repaid the Lender in full. The forgiveness was recorded as other income for the fiscal year ended September 30, 2021.

During April 2023, management received notification from the SBA that one of the Company’s forgiveness applications related to the PPP Loans was under review. As part of the review, the SBA requested additional payroll information. Additionally, the SBA requested information regarding the ability of the Company’s affiliates to meet SBA size standards and/or PPP corporate maximum limits. The requested information was subsequently provided to the SBA through the Lender. The Company recognizes that there is a possibility that the SBA could reverse its previous determination on the forgiveness of the PPP Loans. As a result of this uncertainty, the Company restated the previously issued audited financial statements of the Company for the fiscal years 2022 and 2021. The Company has recorded a short-term borrowing due to the SBA inquiry for the full $9.8 million, plus accrued interest for all periods presented.

During July 2023, management received notification from the SBA that two additional forgiveness applications related to the PPP Loans were under review. As part of the review, the SBA requested information regarding the ability of the Company’s affiliates to meet SBA size standards and/or PPP corporate maximum limits. The requested information was subsequently provided to the SBA through the Lender. As of June 30, 2026, there have been no further requests or communications from the SBA relating to the PPP Loans.

Borrowers must retain PPP documentation for at least six years after the date the loan is forgiven or paid in full, and the SBA and SBA Inspector General must be granted these files upon request. The SBA could revisit its forgiveness decision and determine that the Company does not qualify as a whole or in part for loan forgiveness and demand repayment of the loans. In addition, it is unknown what type of penalties could be assessed against the Company if the SBA disagrees with the Company’s certification. Any penalties in addition to the potential repayment of the PPP Loans could negatively impact the Company’s business, financial condition and results of operations and prospects.

4. REVENUE RECOGNITION

Our revenue is primarily derived from construction contracts that can span several quarters. We recognize revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606,Revenue from Contracts with Customers (“ASC 606” or “Topic 606”) which provides for a five-step model for recognizing revenue from contracts with customers as follows:

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

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

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

Our contract liabilities consist of billings in excess of costs and estimated earnings. Billings in excess of costs and estimated earnings represent amounts billed to customers in advance of the Company’s performance, including advance payments negotiated as a contract condition. These amounts are generally recognized as revenue over the next twelve months as the related performance obligations are satisfied.

Provisions for expected losses are recognized in the consolidated statements of income at the individual performance obligation level in the period in which management determines that the estimated total costs to satisfy a performance obligation will exceed the estimated total revenue expected to be realized from that performance obligation.

5. SEGMENT INFORMATION

Energy Services’ operations are managed by senior executives who report to the Company’s President and CEO (the “President”), the chief operating decision maker. The President uses operating income for each of Energy Services’ reportable segments and considers forecast to actual variances to assess performance and when making decisions about allocating capital and other resources.

Energy Services’reportable segments are: Underground Infrastructure Construction, Industrial Construction, and Building Construction.

Underground Infrastructure Construction primarily includes new construction and maintenance work in the following areas: water and wastewater pipelines, natural gas distribution pipelines, natural gas transmission pipelines, natural gas stations and ancillary facilities, corrosion protection services, and horizontal drilling services.

Industrial Construction primarily includes new construction and maintenance work in the following areas: electrical, mechanical, HVAC/R, controls, and fire protection services in automotive, chemical, power, and manufacturing facilities.

Building Construction primarily includes new construction and rehabilitation activities in the following areas: school projects, local and state building projects, and small bridge projects. Most services performed by the legal entity in this segment are subcontracted both to outside contractors and internally to other legal entities within the Company. Services subcontracted internally are eliminated from segmented reporting.

Energy Services’ segment results are derived from the types of services provided across its operating companies in each of its end-user markets. The Company’s business model allows multiple operating companies to serve the same or similar customers and to provide a range of services across end-user markets. Reportable segment information, including revenues and operating income by type of work, is gathered from each operating company. Classification of operating company revenues by type of work for segment reporting purposes can require judgment on the part of management. Segment operating expenses (excluding depreciation expense) primarily include cost of services, such as wages and benefits; subcontractor costs; materials; certain equipment rental and maintenance costs, and other direct and indirect project costs.

Separate measures of the Company’s assets and cash flows by reportable segment, including capital expenditures, are utilized by the President to evaluate segment performance since the Company’s fixed assets are not used on an interchangeable basis across its reportable segments.

Corporate and non-allocated costs include non-allocated corporate salaries, benefits and incentive compensation, acquisition and integration costs, non-cash stock-based compensation, investor relation expenses, and accounting review and audit fees.

The following tables show interim segment financial information for the three and nine months ended and at June 30, 2026:

The following tables show interim segment financial information for the three and nine months ended and at June 30, 2025:

6. DISAGGREGATION OF REVENUE

The Company disaggregates revenue based on the following lines of service: (1) Gas & Water Distribution, (2) Gas & Petroleum Transmission, and (3) Electrical, Mechanical, & General services and construction. Our contract types are: Lump Sum, Unit Price, Cost Plus and T&M. The following tables present our disaggregated revenue for the three and nine months ended June 30, 2026 and 2025:

The Company’s disaggregated revenue does vary slightly from the Company’s segment reporting due to combining the Industrial and Building Construction into Electrical, Mechanical, & General, and one legal entity in the Underground Infrastructure Construction segment that performs services other than underground construction that are included in Electrical, Mechanical, & General. The volume of these services is not material to the Company’s segment reporting.

7. CONTRACT BALANCES

The Company’s accounts receivable consists of amounts that have been billed to customers and collateral is generally not required. Most of the Company’s contracts have monthly billing terms; however, billing terms for some are based on project completion. Payment terms are generally within 30 to 45 days after invoices have been issued. The Company attempts to negotiate two-week billing terms and 15-day payment terms on larger projects. The timing of billings to customers may generate contract assets or contract liabilities.

During the three and nine months ended June 30, 2026, we recognized revenue of $1.8 million and $27.7 million, respectively, that was included in the contract liability balance at September 30, 2025.

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

8. PERFORMANCE OBLIGATIONS

For the three and nine months ended June 30, 2026, there wasno significant revenue recognized as a result of changes in contract transaction price related to performance obligations that were satisfied prior to September 30, 2025. Changes in contract transaction price can result from items such as executed or estimated change orders, and unresolved contract modifications and claims.

At June 30, 2026, the Company had approximately $216.6 million of transaction price allocated to remaining performance obligations associated with specifically identified projects under contract. Management expects approximately $200.0 million of this amount to be recognized as revenue over the next twelve months, with the remainder expected to be recognized thereafter.

The amount disclosed above excludes approximately $70.0 million of estimated recurring maintenance and blanket contract work expected to be performed over the next twelve months, including qualifying arrangements for which the Company recognizes revenue using the right to invoice practical expedient. These amounts are included in the Company’s backlog but are excluded from the disclosure of remaining performance obligations when the applicable practical expedient or other ASC 606 exclusion applies.

9. UNCOMPLETED CONTRACTS

Costs, estimated earnings, and billings on uncompleted contracts as of June 30, 2026 and September 30, 2025, are summarized as follows:

The Company’s unaudited backlog at June 30, 2026 and September 30, 2025 was $286.6 million and $259.7 million, respectively.

10. FAIR VALUE MEASUREMENTS

The fair value measurement guidance of the Financial Accounting Standards Board (“FASB”) ASC 820,Fair Measurement defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and specifies 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 measurement guidance of the FASB ASC 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. 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 include 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 2 also includes derivative contracts whose value is determined using a pricing model with observable market inputs or can be derived principally from or 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 was estimated using a discounted cash flow analysis and a yield rate that was estimated based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities. The fair value of the aggregate principal amount of the Company’s fixed-rate debt of $29.3 million at June 30, 2026 was $28.9 million. The fair value of the aggregate principal amount of the Company’s fixed-rate debt of $43.8 million at September 30, 2025 was $42.8 million.

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

11. EARNINGS PER SHARE

The amounts used to compute the earnings per share for the three and nine months ended June 30, 2026 and 2025 are summarized below.

12. INCOME TAXES

The components of income taxes are as follows:

The Company’s income tax expense and deferred tax assets and liabilities reflect management’s best estimate of current and future taxes to be paid. Significant judgments and estimates are required in the determination of the consolidated income tax expense. The Company’s provision for income taxes is computed by applying a federal rate of 21.0% and a blended state rate of approximately 5.0% to 6.0% to taxable income or loss after consideration of non-taxable and non-deductible items.

The effective income tax rate for the three months ended June 30, 2026 was 18.5%, as compared to 6.2%, for the same period in 2025. The effective income tax rate for the nine months ended June 30, 2026 was 25.1%, as compared to 29.5%, for the same period in 2025. Effective income tax rates are estimates and may vary from period to period due to changes in the amount of taxable income and non-deductible expenses.

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

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

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, which will result in taxable or deductible amounts in the future. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company had $688,000 and $6.9 million of federal net operating loss carryforwards at June 30, 2026 and September 30, 2025, respectively. The Company had $31.9 million and $41.9 million of state net operating loss carryforwards at June 30, 2026 and September 30, 2025, respectively. The state net operating loss carryforwards begin to expire in 2026.

The Company does not believe that it has any unrecognized tax benefits included in its consolidated financial statements that require recognition. The Company has not had any settlements in the current period with taxing authorities, nor has it recognized tax benefits as a result of a lapse of the applicable statute of limitations. The Company recognizes interest and penalties accrued related to unrecognized tax benefits, if applicable, in general and administrative expenses.

13. SHORT-TERM AND LONG-TERM DEBT

Revolving Credit Facility

Effective June 28, 2026, the Company renewed its $30.0 million revolving line of credit with United Bank, which matures on June 28, 2028. Borrowings under the revolving line of credit bear interest at theone – month Term SOFR plus the applicable margin, as defined in the credit agreement.

Availability under the revolving line of credit is subject to a borrowing base calculation, as summarized below:

The Company’s outstanding borrowings under the revolving line of credit of $12.3 million and $24.8 million at June 30, 2026 and September 30, 2025, respectively, are classified as long-term debt based on the June 28, 2028 contractual maturity date.

The credit agreement contains financial covenants requiring the Company to maintain a minimum Fixed Charge Coverage Ratio of 1.25 to 1.00 and a maximum Senior Funded Debt to EBITDA ratio of 2.75 to 1.00. These financial covenants are tested quarterly in accordance with the terms of the credit agreement. The lender has agreed to exclude the effects of the Company’s PPP loan accounting restatement from covenant compliance calculations while the final determination regarding PPP loan forgiveness remains pending.

The Company was in compliance with all financial covenants as of June 30, 2026 and expects to remain in compliance with its financial covenants for at least the next twelve months.

Paycheck Protection Program Loans

Due to the economic uncertainties created by COVID-19 and limited operating funds available, the Company applied for loans under the PPP. On April 15, 2020, the Company and its subsidiaries, C.J. Hughes, Contractors Rental and Nitro, entered into separate PPP notes effective April 7, 2020, with its Lender in an aggregate principal amount of $13.1 million pursuant to the PPP Loans. In a special meeting held on April 27, 2020, the Board of Directors of the Company unanimously voted to return $3.3 million of the PPP Loans after discussing the financing needs of the Company and subsidiaries. That left the Company and subsidiaries with $9.8 million in PPP Loans to fund operations. During fiscal year 2021, the Company received notice that the SBA had granted forgiveness of the $9.8 million of PPP Loans and the SBA repaid the Lender in full. The forgiveness was recorded as other income for the fiscal year ended September 30, 2021.

During April 2023, management received notification from the SBA that one of the Company’s forgiveness applications related to the PPP Loans was under review. As part of the review, the SBA requested additional payroll information. Additionally, the SBA requested information regarding the ability of the Company’s affiliates to meet SBA size standards and/or PPP corporate maximum limits. The requested information was subsequently provided to the SBA through the Lender. The Company recognizes that there is a possibility that the SBA could reverse its previous determination on the forgiveness of the PPP Loans. As a result of this uncertainty, the Company restated the previously issued audited financial statements of the Company for fiscal 2022 and 2021. The Company has recorded a short-term borrowing due to the SBA inquiry for the full $9.8 million, plus accrued interest.

During July 2023, management received notification from the SBA that two additional forgiveness applications related to the PPP Loans were under review. As part of the review, the SBA requested information regarding the ability of the Company’s affiliates to meet SBA size standards and/or PPP corporate maximum limits. The requested information was subsequently provided to the SBA through the Lender. As of June 30, 2026, there have been no further requests or communications from the SBA relating to the PPP Loans.

Borrowers must retain PPP documentation for at least six years after the date the loan is forgiven or paid in full, and the SBA and SBA Inspector General must be granted these files upon request. The SBA could revisit its forgiveness decision and determine that the Company does not qualify as a whole or in part for loan forgiveness and demand repayment of the loans. In addition, it is unknown what type of penalties could be assessed against the Company if the SBA disagrees with the Company’s certification. Any penalties in addition to the potential repayment of the PPP Loans could negatively impact the Company’s business, financial condition and results of operations and prospects.

A summary of short-term and long-term debt as of June 30, 2026 and September 30, 2025 is as follows:

14. ACQUISITIONS

Energy Services accounts for business combinations under the acquisition method in accordance with ASC Topic 805 “Business Combinations”. Accordingly, for the transaction, the purchase price is allocated to the fair value of the assets acquired and liabilities assumed as of the date of the acquisition. In conjunction with ASC 805, upon receipt of final fair value estimates during the measurement period, which must be within one year of the acquisition date, Energy Services records any adjustments to the preliminary fair value estimates in the reporting period in which the adjustments are determined.

On December 2, 2024, the Company completed the acquisition of substantially all the physical assets of Tribute Contracting & Consultants, LLC (“Tribute LLC”), an Ohio corporation located in South Point, Ohio for$21.2 million cash and$2.0 million in the Company’s common stock. ASC 805-10-50-2 requires public companies that present comparative financial statements to present pro forma financial statements as though the business combination that occurred during the current fiscal year had occurred as of the beginning of the comparable prior annual reporting period. As allowed under ASC 805-10-50-2, the Company finds this information impracticable to provide for the periods presented due to the lack of availability of meaningful financial statements of the acquired companies that comply with U.S. GAAP.

On September 30, 2025, the Company completed the acquisition of substantially all the physical assets of Rigney Digital Systems Ltd. (“Rigney Digital”), a West Virginia corporation located in Hurricane, West Virginia for $3.0 million cash, $1.0 million in the Company’s common stock, and afive-year $500,000 sellers’ note. ASC 805-10-50-2 requires public companies that present comparative financial statements to present pro forma financial statements as though the business combination that occurred during the current fiscal year had occurred as of the beginning of the comparable prior annual reporting period. As allowed under ASC 805-10-50-2, the Company finds this information impracticable to provide for the periods presented due to the lack of availability of meaningful financial statements of the acquired companies that comply with U.S. GAAP.

15. GOODWILL AND INTANGIBLE ASSETS

The Company follows the guidance of ASC Topic 350,Intangibles-Goodwill and Other, which requires a company to record an impairment charge based on the excess of a reporting unit’s carrying amount of goodwill over its fair value. Under the current guidance, companies can first choose to assess any impairment based on qualitative factors (Step 0). If a company fails this test or decides to bypass this step, it must proceed with a quantitative assessment of goodwill impairment. The Company didnot have a goodwill impairment at June 30, 2026 or September 30, 2025.

A table of the Company’s goodwill as of June 30, 2026 and September 30, 2025 is below:

A table of the Company’s intangible assets subject to amortization at June 30, 2026 and September 30, 2025 is below:

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

The weighted-average amortization period by major intangible asset class and in total are as follows:

16. LEASE OBLIGATIONS

The Company leases office space for SQP at a rate of $1,500 per month. The lease, originally executed on March 25, 2021, has atwo-year base term with five one-year renewal options available following expiration of the base term. As of June 30, 2026, the Company has committed to aone-year renewal period and is evaluating the exercise of additional renewal options.

The Company hastwo right-of-use operating leases acquired on April 29, 2022, as part of the Tri-State Paving, LLC acquisition. The first lease, for the Hurricane, West Virginia facility, had a net present value of $236,000 at inception and a carrying value of $0 at June 30, 2026. The lease bears interest at 4.5%, based on the Company’s incremental borrowing rate at inception. The Company executed an amendment to extend the lease for one additional year following the expiration of the original term. As of June 30, 2026, the Company has committed toone renewal period and is evaluating additional renewals.

The second lease, for the Chattanooga, Tennessee facility, had a net present value of $144,000 at inception and expired on August 31, 2024. The lease was renewed for atwo - year term with a net present value of $140,000 and had a carrying value of $11,000 at June 30, 2026. The lease bears interest at 8.5%, based on the Company’s incremental borrowing rate at inception.

The Company has a right-of-use operating lease with Enterprise Fleet Management. The master lease covered 102 vehicles and had a carrying value of $2.2 million at June 30, 2026. Each vehicle under the master lease arrangement carries its own implicit rate.

The Company has afive - year right-of-use operating lease renewed in April 2026 for the Winchester, Kentucky facility. The lease had a net present value of $481,000 at inception and a carrying value of $461,000 at June 30, 2026. The lease bears interest at 6.75%, based on the Company’s incremental borrowing rate at inception. The lease was renewed for athree-year term and hastwo one – year renewal options that the Company expects to exercise.

The Company has a right-of-use operating lease acquired on December 1, 2025 for the Columbus, Ohio facility. The lease had a net present value of $255,000 at inception and a carrying value of $212,000 at June 30, 2026. The lease bears interest at 6.75%, based on the Company’s incremental borrowing rate at inception.

The Company has a right-of-use operating lease acquired on January 1, 2026 for the Oklahoma City, Oklahoma facility. The lease had a net present value of $208,000 at inception and a carrying value of $177,000 at June 30, 2026. The lease bears interest at 6.75%, based on the Company’s incremental borrowing rate at inception.

The Company has a right-of-use operating lease acquired on January 1, 2026 for the Louisville, Kentucky facility. The lease had a net present value of $128,000 at inception and a carrying value of $118,000 at June 30, 2026. The lease bears interest at 6.75%, based on the Company’s incremental borrowing rate at inception. Lease payments did not commence until April 1, 2026.

The Company has a right-of-use operating lease acquired on May 1, 2026 for a facility in Buena Vista, Virginia. The lease had a net present value of $224,000 at inception and a carrying value of $206,000 at June 30, 2026. The lease bears interest at 6.75%, based on the Company’s incremental borrowing rate at inception.

Schedules related to the Company’s operating leases for the three and nine months ended June 30, 2026 and 2025 and at June 30, 2026 can be found below:

Operating Lease-Weighted Average Remaining Term

Operating Lease Maturity Schedule

The Company rents equipment for use on construction projects with rental agreements week to week or month to month. Rental expense can vary by fiscal year due to equipment requirements on construction projects and the availability of Company owned equipment. Rental expenses, which is included in cost of revenue on the consolidated statements of income, were $8.3 million and $4.8 million for the three months ended June 30, 2026, and 2025, respectively, and $20.1 million and $13.8 million for the nine months ended June 30, 2026 and 2025, respectively.

17. SHARE-BASED COMPENSATION

The Company has a stock-based compensation plan, under which restricted stock awards are available for issuance to eligible participants. Non-cash stock-based compensation expense is included within general and administrative expense in the consolidated financial statements. Share-based payments are recognized based on their grant date fair values. Forfeitures are recorded as they occur.

Grants of restricted stock awards are valued based on the closing market share price of the Company’s common stock as reported on the Nasdaq Stock Market, LLC (the “market price”) on the date of grant. Non-cash-based compensation expense arising from restricted shares is recognized on a straight-line basis over the vesting period. Grants of restricted shares generally vestone-third annually over a period ofthree years.

Some participants may choose the net share settlement method to cover withholding tax requirements, in which case shares withheld for taxes are not issued, but are treated as common stock repurchases in the consolidated financial statements, as they reduce the number of shares that would have been issued upon vesting. The Company then pays the corresponding withholding taxes to the appropriate taxing authorities in cash on behalf of the recipient. Withheld shares, which are valued at the market price on the date of grant, are recorded as a reduction to additional paid-in capital, and related payments to taxing authorities are reflected within financing activities in the consolidated statements of cash flows.

For the three and nine months ended June 30, 2026, the Company granted 0 and 19,594 shares, respectively, related to restricted stock awards. The Company granted 0 and 3,970 shares, respectively, related to restricted stock awards for the three and nine months ended June 30, 2025.

The table below represents all unvested restricted stock awards at June 30, 2026:

The table below represents all restricted stock awards to Named Executive Officers as of June 30, 2026:

The table below represents the total unvested restricted stock awards and grant amounts that will vest in future periods at June 30, 2026:

The table below represents the total unrecognized compensation expense for unvested restricted stock awards to be expensed in future periods at June 30, 2026:

18. EQUITY OFFERING

On February 18, 2026, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Lake Street Capital Markets, LLC (the “Underwriter”). Pursuant to the terms of the Underwriting Agreement, the Company agreed to issue and sell, and the Underwriter agreed to purchase, subject to and on the conditions set forth therein,1,740,000 shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), in a registered public offering pursuant to an effective shelf registration statement on Form S-3 (File No. 333-280025) and a related prospectus, including the related prospectus supplement, filed with the Securities and Exchange Commission (the “Offering”). Under the terms of the Underwriting Agreement, the Company granted the Underwriter a 30-day option to purchase up to an additional 261,000 shares of Common Stock.

The Offering closed on February 20, 2026, with the Underwriter purchasing 1,740,000 shares of the Company’s Common Stock at the public offering price of $11.50 per share. Net proceeds from the Offering to the Company were approximately $18.4 million, after deducting underwriting discounts and commissions and estimated offering expenses.

On February 24, 2026, the Underwriter exercised its overallotment option and completed the sale of an additional 261,000 shares of common stock at the public offering price of $11.50 per share. The proceeds to the Company in connection with the exercise of the option and the issuance of the additional shares, after deducting the underwriting discount and commissions but before deducting other expenses payable by the Company, were approximately $2.8 million.

19. SUBSEQUENT EVENTS

On July 15, 2026, the Company paid a quarterly dividend of $0.04 per common share to shareholders of record as of June 30, 2026.

Management has evaluated all subsequent events for accounting and disclosure. There have been no other material events during the period, other than noted above, that would either impact the results reflected in the report or the Company’s results going forward.