RGC RESOURCES INC

Resources is an energy services company primarily engaged in the sale and distribution of natural gas. The condensed consolidated financial statements include the accounts of Resources and its wholly owned subsidiaries: Roanoke Gas and Midstream.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to fairly present Resources' financial position as of* June 30, 2026*, cash flows for thenine months ended* June 30, 2026and2025*, and the results of its operations, comprehensive income, and changes in stockholders' equity for thethree andnine months ended* June 30, 2026and2025*. The results of operations for thethree andnine months ended* June 30, 2026* arenot indicative of the results to be expected for the fiscal year ending* September 30, 2026*as quarterly earnings are affected by the highly seasonal nature of the business and weather conditions generally result in greater earnings during the winter months.

The unaudited condensed consolidated financial statements and related notes are presented under the rules and regulations of the SEC. Pursuant to those rules, certain information and note disclosures normally included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted. Although the Company believes that the disclosures are adequate, the unaudited condensed consolidated financial statements and the related notes should be read in conjunction with the financial statements and notes contained in the Company’s Form10-K for the year ended* September 30, 2025*. The* September 30, 2025* consolidated balance sheet was included in the Company’s audited financial statements included in Form10-K.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company’s significant accounting policies are described in Note1 to the consolidated financial statements contained in the Company's Form10-K for the year ended* September 30, 2025*.

Certain amounts previously disclosed have been reclassified to conform to current year presentations.

Recently Issued or Adopted Accounting Standards

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740*): Improvements to Income Tax Disclosures*. The new guidance requires that on an annual basis public business entities disclose specific categories in the rate reconciliation table and provide additional information for reconciling items that meet a quantitative threshold (items equal to or greater than5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory rate). The required disclosures will provide more granularity regarding the payment of income taxes to federal, state and foreign entities. The Company doesnot expect certain requirements of this ASU to have a significant impact to its current disclosures as all of its operations are domestic and reside intwo states. Changes to the rate reconciliation table will result in additional disclosure. The new guidance is effective for the Company this fiscal year end.

In* November 2024,the FASB issued ASU2024*-03, Income Statement - Reporting Comprehensive Income (Topic220*):* Expense Disaggregation Disclosures. The new guidance requires public business entities to disclose certain additional detail about expenses including, among other items, purchases of inventory, employee compensation, depreciation and intangible asset amortization included within each income statement expense line items within continuing operations. The guidance also requires disclosure of the total amount of selling expenses and the Company’s definition of selling expenses. Such disclosures must be made on an annual and interim basis and integrated with existing disclosure requirements in a tabular format in the footnotes to the financial statements. Further, in* January 2025,the FASB issued ASU2025*-01, Income Statement - Reporting Comprehensive Income (Topic220*):* Expense Disaggregation Disclosures*: Clarifying the Effective Date*, which clarified the effective date of ASU2024-03. The new guidance is effective for the Company for fiscal year beginning* October 1, 2027and interim periods within fiscal year beginning October 1, 2028.*The Company is currently assessing the impact of the new guidance on its financial statement disclosures.

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In* November 2025,the FASB issued ASU2025*-09, Derivatives and Hedging (Topic815*): Hedge Accounting Improvements*. The new guidance clarifies certain aspects of hedge accounting and addresses several incremental issues arising from the global reference rate reform initiative. The amendments expand the hedged risks permitted to be aggregated in a group of individual forecasted transactions in a cash flow hedge by changing the requirement to designate a group of individual forecasted transactions. The new guidance is effective for the Company for annual periods beginning* October 1, 2027.*The Company is currently assessing the impact, if any, of the new guidance on its financial statements.

In* December 2025,the FASB issued ASU2025*-11, Interim Reporting (Topic270*): Narrow-Scope Improvements*. The new guidance makes targeted improvements to interim reporting disclosures, clarifying when guidance is applicable. A new principle was added to require entities to continue to disclose material events in each quarter that have occurred since the end of the last annual reporting period. The new guidance is effective for the Company for interim periods within fiscal year beginning* October 1, 2028.*The Company is currently assessing the impact of the new guidance on its interim disclosures.

In* May 2026,the FASB issued ASU2026*-02, Environmental Credits and Environmental Credit Obligations (Topic818*). The new guidance improves the financial accounting and disclosure to enhance understanding of the environmental credits and environmental credit obligations associated with regulatory compliance programs and the comparability of the information. The new guidance is effective for the Company for interim periods within the fiscal year beginning October 1, 2028.*The Company is currently assessing the impact of the new guidance on its financial statements.

Other accounting standards that have been issued by the FASB, SEC or other standard-setting bodies arenot currently applicable to the Company or arenot expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The Company assesses new contracts and identifies related performance obligations for promises to transfer distinct goods or services to the customer. Revenue is recognized when performance obligations have been satisfied. In the case of Roanoke Gas, the Company contracts with its customers for the sale and/or delivery of natural gas.

The following tables summarize revenue by customer, product and income statement classification:

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Gas utility revenues

Substantially all of Roanoke Gas' revenues are derived from rates authorized by the SCC through its tariffs. Based on its evaluation, the Company has concluded that these tariff-based revenues fall within the scope of ASC606. Tariff rates represent the transaction price. Performance obligations include the procurement and transportation of natural gas through the Company's distribution system to customers. The delivery of natural gas to customers results in the satisfaction of the Company’s respective performance obligations over time.

All customers are billed monthly based on consumption as measured by metered usage with payments due20 days from the rendering of the bill. Revenue is recognized as bills are issued for natural gas that has been delivered or transported. In addition, the Company utilizes the practical expedient that allows an entity to recognize the invoiced amount as revenue, if that amount corresponds to the value received by the customer. Since customers are billed tariff rates, there isno variable consideration in the transaction price.

Unbilled revenue is included in residential and commercial revenues in the preceding table. Natural gas consumption is estimated for the period subsequent to the last billed date and up through the last day of the month. Estimated volumes and approved tariff rates are utilized to calculate unbilled revenue. The following month, the unbilled estimate is reversed, the actual usage is billed and a new unbilled estimate is calculated. The Company obtains metered usage for transportation and interruptible customers at the end of each month, thereby eliminating any unbilled consideration for these rate classes.

Other revenues

Other revenues primarily consist of miscellaneous fees and charges, utility-related revenuesnot directly billed to utility customers and billings for non-utility activities. Customers are invoiced monthly based on services provided for these activities. The Company utilizes the practical expedient allowing revenue to be recognized based on invoiced amounts. The transaction price is based on a contractually predetermined rate schedule; therefore, the transaction price represents total value to the customer andno variable price consideration exists.

Alternative revenue program revenues

ARPs, which fall outside the scope of ASC606, are SCC-approved mechanisms that allow for the adjustment of revenues for certain broad, external factors, or for additional billings if the entity achieves certain performance targets. The Company's ARPs include its WNA, which adjusts revenues for the effects of weather temperature variations as compared to the30-year average; the SAVE Plan over/under collection mechanism, which adjusts revenues for the differences between SAVE Plan revenues billed to customers and the revenues earned, as calculated based on the timing and extent of infrastructure replacement completed during the period; and the RNG over/under collection mechanism, which adjusts revenues similar to the SAVE Plan, but is calculated based on the timing and costs associated with owning, operating and maintaining the RNG facility. These amounts are ultimately collected from, or returned to, customers through future rate changes as approved by the SCC.

Customer accounts receivable and liabilities

Accounts receivable, as reflected in the condensed consolidated balance sheets, includes both billed and unbilled customer revenues, as well as amounts that arenot related to customers. The asset and liability balances associated with customers are provided below:

(1) Included in accounts receivable in the condensed consolidated balance sheet. Amounts shown net of reserve for credit losses.

The Company didnot incur any significant costs to obtain contracts during the period. Certain customers elect to pay even amounts monthly, giving rise to assets and liabilities presented in the table above. All amounts clear annually.

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Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the Company's executive management in deciding how to allocate resources and assess performance. The Company hastwo reportable segments based on the nature of their activities and are defined as follows:

Gas Utility - The natural gas segment of the Company generates revenue from its tariff rates and other regulatory mechanisms through which it provides the sale and distribution of natural gas to its residential, commercial and industrial customers.

Investment in Affiliates - The investment in affiliates segment reflects the income generated through the activities of the Company's investment in the LLC.

In order to reconcile to net income as disclosed in the consolidated statements of income, "Corporate and other" rows are included below associated with certain unallocated expenses that represent corporate reporting adjustments.

The accounting policies of the reported segments are the same as those described in Note1 to the consolidated financial statements contained in the Company's Form10-K for the year ended* September 30, 2025*. Information is routinely presented to the CODM, the Company's President and Chief Executive Officer, in a manner that makes significant elements of profitability and cash flows of each segment easily discernible. The CODM evaluates the performance of the reportable segments based on the Gas Utility's operating income (loss) and the Investment in Affiliates' equity in earnings, as well as cash flows, and uses these measures to evaluate segment performance and allocate resources, primarily during the annual budget and forecasting processes. The CODM regularly reviews variances between budgeted and actual results in assessing earnings, operational performance, and allocating resources including personnel and capital allocations that affect each reportable segment. When the CODM reviews balance sheet information, it is at the consolidated level. Intersegment transactions are recorded at cost.

Information related to the Company's segments are provided below:

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The SCC exercises regulatory authority over the natural gas operations of Roanoke Gas. Such regulation encompasses terms, conditions and rates to be charged to customers for natural gas service, safety standards, service extension and depreciation.

In response to continued inflationary pressures, the Company filed an expedited rate application on* December 2, 2025with the SCC seeking to increase its non-gas base rates by $4.3 million annually. The SCC permitted the Company to implement its new rates on an interim basis for service rendered on or after January 1, 2026,subject to refund. On July 1, 2026,the Company reached a settlement with the SCC Staff on all outstanding issues in the case. Under the terms of the settlement, the Company agreed to an annual increase in revenues of $3.85 million. The Company began billing the stipulated rates effective August 1, 2026,as approved by the Hearing Examiner. The Company has recorded a provision for refund, including interest, associated with customer billings for the difference between the interim rates and the stipulated rates. The terms of the settlement stipulate that updates to future SAVE and RNG Riders will utilize a capital structure containing a 59% equity ratio and a 9.9% return on equity. Based on the Commission's procedural schedule, the Company expects final resolution of the case in thefirst* quarter of fiscal2027.

On* May 29, 2026,Roanoke Gas filed for approval of an updated RNG Rider to become effective October 1, 2026.The RNG Rider recovers costs associated with the RNG facility to produce renewable natural gas that was approved by the SCC in2022.* The revenue requirement associated with the RNG Rider is $1.76 million. The impact to customers is affected by the under-recovered costs during the prior fiscal year, the sale of environmental credits and the over crediting of customers for RIN sales, resulting in a net impact to customers of approximately $708,000. The Company expects final resolution from the SCC in* September 2026.*

On* June 30, 2026,Roanoke Gas filed for approval of an updated annual SAVE Rider to become effective October 1, 2026.The proposed SAVE Rider revenue requirement of $3.79 million is designed to recover the costs associated with prior years’ SAVE eligible investments that occurred under the current SAVE Plan and an estimated $9.26 million of SAVE eligible investment during fiscal2027.* The revenue requirement also included an adjustment for under-recovered costs incurred during the prior year. The Company expects final resolution from the SCC in* September 2026.*

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Midstream has invested less than 1% in the equity interests of the LLC that owns and operates the MVP, Southgate and Boost. The Company accounts for its interest in the LLC under the equity method of accounting given the LLC maintains specific ownership accounts for each investor, and also considering the Company's rights under the LLC management agreement and the Company's involvement as a stakeholder of the MVP. The Company has been using the equity method since the inception of its investment in fiscal2016.

The Company participates in the earnings of the LLC proportionate to its level of investment, favorably adjusted for a basis difference between the Company's capital account and its carrying value that arose when the Company recorded an other-than-temporary impairment of its investment in2022. This basis difference amortization is a favorable non-cash adjustment to income over the book life of the MVP, which is40 years. The Company's share of earnings from the LLC and the basis difference amortization are presented under equity in earnings of unconsolidated affiliates on the condensed consolidated statements of income. The Company receivedthree quarterly cash distributions from the LLC during thefirst nine months of fiscal2026 and2025 totaling approximately $2.4 million and $2.7 million, respectively, and expects future quarterly distributions to be of a similar magnitude to those received to date.

Midstream assesses the value of its investment in the LLC on at least a quarterly basis, andno impairment indicators were identified in fiscal2026 or2025.

Investment balances of combined MVP, including Southgate and Boost, as of* June 30, 2026* and* September 30, 2025*, are reflected in the table below:

The change in the investment in unconsolidated affiliates is provided below:

Summary combined unaudited financial statements of MVP, Southgate and Boost are presented below.

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The Company has a line-of-credit in the principal amount of $30 million that it has historically renewed annually each* March.On March 17, 2026,Roanoke Gas amended its line-of-credit to extend the maturity date to March 31, 2028.The line-of-credit's variable interest rate is based upon Term SOFR plus 1.25% and provides for multiple tier borrowing limits to accommodate seasonal borrowing demands. The Company's total available borrowing limits during the term of the line-of-credit range from $20 million to $30 million. As of June 30, 2026*, the Company had an outstanding balance of $12,811,880 under the line-of-credit.

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Long-term debt consists of the following:

On* June 2, 2026,Roanoke Gas entered into an unsecured delayed-draw promissory note through a Fourth Amendment to the loan agreement in the principal amount of $15 million. Under the provisions of the loan agreement, Roanoke Gas can draw the funds at any time through September 20, 2026.The Company intends to draw the full amount on August 20, 2026and the proceeds will be used to repay a maturing note of equal amount. Accordingly, the maturing note has been classified as long-term as of June 30, 2026.The delayed-draw promissory note has an interest rate of Term SOFR plus 1.00%, with interest paid monthly, and matures on August 20, 2029.*The loan agreement included a 0.10% origination fee.

On* September 5, 2025,Midstream established new amortizing term notes withtwo* banks in the initial amounts of $38.6 million and $15 million, which refinanced and replaced all of Midstream's outstanding debt. The interest rate on the new term notes isone month Term SOFR plus 1.55% with interest payable monthly. The term notes also included a 0.3% origination fee and 0.1% annual fee. Quarterly principal payments are due each* October,** January,** Apriland July,and repayment terms are based on a schedule aligned with the terms of the MVP shipper agreements, which expire June 2044.The term notes mature on September 5, 2032.Also, on September 5, 2025,Midstream executedtwo* interest rate swap agreements initially totaling $35.6 million, which corresponds to the term and draw provisions of the term note agreement and effectively converts that portion of the variable rate note to a fixed rate instrument with an effective annual interest rate of 5.061%. Thetwo existing interest rate swaps will remain in place, have been redesignated, and when combined with the new interest rate swap agreements, hedged Midstream's unsecured notes.

Additionally, on* September 5, 2025,Midstream entered into a loan agreement for the MVP Southgate extension and MVP Boost expansion that can be drawn to principal amounts of $1.85 million and $3.65 million, respectively, (the "Notes"). The notes bear an interest rate of Term SOFR plus 1.75% subject to adjustment to Term SOFR plus 1.55% upon meeting certain milestones. The notes mature on September 5, 2030,*at which time the outstanding principal balance on each note is due. The loan agreement included a 0.25% origination fee.

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Debt issuance costs are amortized over the life of the related debt. As of* June 30, 2026* and* September 30, 2025*, the Company also had an unamortized loss on the early retirement of debt of $942,044 and $1,027,684, respectively, which has been deferred as a regulatory asset and is being amortized over a 20-year period.

All debt agreements set forth certain representations, warranties and covenants to which the Company is subject, including financial covenants that limit consolidated long-term indebtedness tonot more than 65% of total capitalization. All of the debt agreements provide for Priority Indebtedness (defined in the debt agreements) tonot exceed 15% of consolidated total assets. The $15 million, $10 million, $53.6 million, $1.85 million and $3.65 million notes have an interest coverage ratio requirement ofnot less than 1.5 to1, which excludes the effect of the non-cash impairments on the LLC investments up to the total investment as of* December 31, 2021.The Company was in compliance with all debt covenants as of June 30, 2026* and* September 30, 2025*.

The Company’s hedging and derivative policy allows management to enter into derivatives for the purpose of managing the commodity and financial market risks of its business operations, including the price of natural gas and the cost of borrowed funds. This policy specifically prohibits the use of derivatives for speculative purposes.

The Company hassix interest rate swaps associated with certain of its variable rate debt as of* June 30, 2026*. Roanoke Gas hastwo variable-rate term notes in the amounts of $15 million and $10 million, with corresponding swap agreements to effectively convert the variable interest rates into fixed rates of 2.00% and 2.49%, respectively. Roanoke Gas also executed an interest rate swap agreement in the amount of $15 million corresponding to the term and draw provisions of the delayed-draw promissory note (see Note7). The swap agreement will effectively convert the note's variable interest rate into a fixed rate of 5.13%. Midstream hasthree swap agreements in the amounts of $2.8 million, $34.3 million, and $14.4 million, corresponding to the $37.1 million and $14.4 million variable rate term notes. The swap agreements convert the notes into fixed rate instruments with effective interest rates of 2.443%,5.061% and 5.061%, respectively. The swaps qualify as cash flow hedges with changes in fair value reported in other comprehensive income.No portion of the swaps were deemed ineffective during the periods presented.

The fair value of the current and non-current portions of the interest rate swaps are reflected in the condensed consolidated balance sheets under the caption interest rate swaps. The table in Note11 reflects the effect on income and other comprehensive income of the Company's cash flow hedges.

ASC820, Fair Value Measurements and Disclosures, established a fair value hierarchy that prioritizes each input to the valuation method used to measure fair value of financial and nonfinancial assets and liabilities that are measured and reported on a fair value basis intoone of the followingthree levels:

Level1 – Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level2 – Inputs other than quoted prices in Level1 that are either for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that arenot active, inputs other than quoted prices that are observable for the asset or liability, or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level3 – Unobservable inputs for the asset or liability where there is little, if any, market activity for the asset or liability at the measurement date, which require the Company to develop its own assumptions.

The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets (Level1) and the lowest priority to unobservable inputs (Level3). All fair value disclosures are categorized withinone of thethree categories in the hierarchy based on the lowest level that is significant to the valuation.

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The following table summarizes the Company’s financial assets and liabilities that are measured at fair value on a recurring basis as required by existing guidance and the fair value measurements by level within the fair value hierarchy:

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The fair value of the interest rate swaps are determined by using the counterparty's proprietary models that can include observable quoted market interest rates and interest rate futures as well as certain assumptions regarding past, present and future market conditions.

Under the asset management contract, a timing difference can exist between the payment for natural gas purchases and the actual receipt of such purchases. Payments are made based on a predetermined monthly volume and a weighted average basket price. At* June 30, 2026* and* September 30, 2025*, the Company had recorded in accounts payable the estimated fair value of the liability expected to be settled.

The Company’s nonfinancial assets and liabilities measured at fair value on a nonrecurring basis consist of its AROs. The AROs are measured at fair value at initial recognition based on expected future cash flows required to settle the obligation.

The carrying value of cash and cash equivalents, accounts receivable, borrowings under line-of-credit, accounts payable, customer credit balances and customer deposits is a reasonable estimate of fair value due to the short-term nature of these financial instruments. In addition, the carrying amount of the variable rate line-of-credit is a reasonable approximation of its fair value.

The following table summarizes the fair value of the Company’s financial assets and liabilities that arenot adjusted to fair value in the financial statements:

The fair value of long-term debt is estimated by discounting the future cash flows of the fixed rate debt based on the underlying treasury rate or other treasury instruments with a corresponding maturity period and estimated credit spread extrapolated based on market conditions since the issuance of the debt.

ASC825, Financial Instruments, requires disclosures regarding concentrations of credit risk from financial instruments. Cash equivalents are investments in high-grade, short-term securities (original maturity less thanthree months), placed with financially sound institutions. Accounts receivable are from a diverse group of customers including individuals and small and large companies in various industries. No individual customer amounted to more than5% of total accounts receivable at* June 30, 2026* and* September 30, 2025*. The Company maintains certain credit standards with its customers and requires a customer deposit, if warranted.

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Basic EPS for thethree andnine months ended* June 30, 2026and2025* was calculated by dividing net income by the weighted-average common shares outstanding during the period excluding unvested nonemployee restricted stock issued to outside directors under the RSPD. Diluted EPS was calculated by dividing net income by the weighted-average common shares outstanding during the period plus potential dilutive common shares. Potential dilutive common shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all options are used to repurchase common stock at market value. The number of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities. The computation of diluted EPS for thethree months ended* June 30, 2026* and2025 excludes potentially dilutive shares of 841 and 1,695, respectively, and 1,268 and 2,000, respectively, for thenine months ended* June 30, 2026and2025,* because to include them would be antidilutive for the periods. These shares could potentially dilute EPS in the future.

A reconciliation of basic and diluted earnings per share is presented below:

A summary of other comprehensive income and loss is provided below:

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The amortization of actuarial gains and losses, reflected in the preceding table, relate to the unregulated operations of the Company. Actuarial gains and losses attributable to the regulated operations are included as a regulatory asset. See Note13 for a schedule of regulatory assets. The amortization of actual gains and losses is recognized as a component of net periodic pension and postretirement benefit costs under other income, net in the condensed consolidated statements of income.

Reconciliation of Accumulated Other Comprehensive Income

The effective tax rates for thethree-month andnine-month periods ended* June 30, 2026* and2025 reflected in the table below are less than the combined federal and state statutory rate of 25.74% due to additional tax deductions from the amortization of excess deferred taxes and amortization of RNG tax credits deferred as a regulatory liability. The effective tax rate for thethree andnine months ended* June 30, 2026*is further reduced primarily due to recognition of amortization of R&D tax credits deferred as a regulatory liability and certain restricted stock-related tax deductions.

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During* September 2025,the Company participated in the IRS Fast Track Settlement (FTS), which is a process that provides the IRS and taxpayers an opportunity to resolve disputes with an appeals official using mediation skills and settlement authority. The IRS and Company agreed on a settlement equal to 40% of the R&D tax credits claimed for fiscal2018* and2019, thetwo years under examination. The Company refunded the settled R&D tax credits, net of related fees, to customers over a4-month period from* January 2026to April 2026.*

ASC740 provides for the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recognized in the financial statements. As a result of the FTS, the Company reduced the reserve for unrecognized tax benefits of $273,936 to $0 as of* September 30, 2025.The Company evaluated its tax positions for thethree* andnine months ended* June 30, 2026* and hasnot identified any significant uncertain tax positions.

The Company’s policy is to classify interest associated with uncertain tax positions as interest expense in the financial statements. Tax penalties, if any, are netted against other income.

The Company files a consolidated federal income tax return and state income tax returns in Virginia and West Virginia, and thus subject to examinations by federal and state tax authorities. The Company adjusted its income tax assets and liabilities to reflect the outcome of the FTS as of* September 30, 2025.With the completion of the IRS examination of the fiscal 2018 and 2019 federal returns, the federal returns and the state returns for Virginia and West Virginia for the tax years ended through September 30, 2022*are closed to examination.

The Company’s regulated operations follow the accounting and reporting requirements of ASC980, Regulated Operations. A regulated company* maydefer costs that have been or are expected to be recovered from customers in a period different from the period in which the costs would ordinarily be charged to expense by an unregulated enterprise. When this situation occurs, costs are deferred as assets in the condensed consolidated balance sheet (regulatory assets) and amortized into expense over periods when such amounts are reflected in customer rates. Additionally, regulators can impose liabilities upon a regulated company for amounts previously collected from customers and for current collection in customer rates of costs that are expected to be incurred in the future (regulatory liabilities). In the event the provisions of ASC980* no longer apply to any or all regulatory assets or liabilities, the Company would write off such amounts and include the effects in the condensed consolidated statements of income and comprehensive income in the period which ASC980 no longer applied.

Regulatory assets included in the Company’s accompanying balance sheets are as follows:

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Regulatory liabilities included in the Company’s accompanying balance sheets are as follows:

As of* June 30, 2026* and* September 30, 2025*, the Company had regulatory assets in the amount of $9,844,326 and $5,897,920, respectively, on which the Company didnot earn a return during the recovery period.

Roanoke Gas currently holds the only franchises and/or CPCNs to distribute natural gas in its service area. These franchises generally extend for multi-year periods and are renewable by the municipalities, including exclusive franchises in the cities of Roanoke and Salem and the Town of Vinton, Virginia. Allthree franchises are set to expire* December 31, 2035.*

Due to the nature of the natural gas distribution business, the Company has entered into agreements with both suppliers and pipelines for natural gas commodity purchases, storage capacity and pipeline delivery capacity. The Company utilizes an asset manager to assist in optimizing the use of its transportation, storage rights and gas supply in order to provide a secure and reliable source of natural gas to its customers. The Company also has storage and pipeline capacity contracts to store and deliver natural gas to the Company’s distribution system. Roanoke Gas is currently served directly bythree primary pipelines that deliver the natural gas supplied to the Company’s distribution system. Depending on weather conditions and the level of customer demand, failure ofone of these transmission pipelines could have a major adverse impact on the Company's ability to deliver natural gas to its customers and its results of operations.

During a routine inspection in thesecond quarter of fiscal2026, the Company noted damage to its LNG facility and more specifically to the LNG tank. The LNG facility, which has been in operation since1972, is used for peak shaving during the winter heating season. The Company has hired subject-matter experts to help assess the cause(s), the scope of the damage and to assist with developing possible workarounds or remediation. The Company has confirmed that the LNG facility willnot be available in the2026-2027 winter heating season. The Company has engaged with both the SCC Staff and its insurance carrier on these matters.

Althoughno natural or liquified natural gas was discovered outside of the LNG tank, upon the recommendation of experts and to ensure safety, during thethird quarter of fiscal2026, the Company substantially emptied the LNG tank, safely removing approximately $450,000 of liquified natural gas inventory. This was necessary to ascertain a root cause of the damage and facilitate any repair. Additional analysis shows the LNG tank underwent significant stress. Further damage investigation costs could exceed $1 million, could be partially destructive in nature, and* mayor may**not* be determinative. Accordingly, the Company is considering alternatives and hasnot finalized its long-term plans for the LNG tank or the LNG facility.

With the LNG facility supply unavailable for the2026-2027 winter heating season, the Company has taken several actions to add natural gas supply to its distribution system, including:

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As of* June 30, 2026,the Company had established a $2.1 million regulatory asset for costs to safely empty the LNG tank and evaluate future options. The Company is currently unable to estimate the total costs associated with this event. The Company has fully engaged with its insurer but doesnot* yet know what portion, if any, of its spending will be covered by insurance. The Company has held numerous discussions with the SCC Staff, and continues to keep them apprised of significant developments. The Company must exercise judgment to conclude that costs deferred as regulatory assets are probable of future recovery. Conclusions are based on factors, including butnot limited to, orders issued by the SCC, historical precedents, discussions with legal counsel, as well as the particular facts and circumstances of the case. The Company will seek recovery of the regulatory asset in a future regulatory proceeding.

The Company has both a pension plan and a postretirement plan. The pension plan covers the Company’s employees hired before* January 1, 2017and provides a retirement benefit based on years of service and employee compensation. The postretirement plan, covering employees hired before January 1, 2000,*provides certain health care and supplemental life insurance benefits to retired employees who meet specific age and service requirements. Net pension plan and postretirement plan expense is detailed as follows:

The components of net periodic benefit cost, excluding the service cost component, are included in other income, net in the condensed consolidated statements of income. Service cost is included in operations and maintenance expense in the condensed consolidated statements of income.

No funding contributions were made to the pension plan or postretirement plan for the periods presented in the tables above. The Company isnot currently planning to make any funding contributions to either plan for the remainder of fiscal2026.

The Company hasfour leases for certain assets including office space and land classified as operating leases with original terms ranging from 3 to 20 years. The Company entered into a new lease during thefirst quarter of fiscal2026, which is a continuation of a prior lease. The Company determines if an arrangement is a lease at inception of the agreement based on the terms and conditions in the contract. The operating lease ROU assets and operating lease liabilities are recognized at the present value of the future minimum lease payments over the lease term at commencement date. As most of the leases donot provide an implicit rate, the Company uses an estimate of its secured incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The incremental borrowing rate is determined by management, aided by inquiries of athird party.

Lease expense for minimum lease payments is recognized on a straight-line basis over the term of the agreement. The Company made an accounting policy election that payments under agreements with an initial term of12 months or less willnot be included on the condensed consolidated balance sheet but will be recognized when paid in the consolidated statements of operations.

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The operating lease ROU assets are reflected in other non-current assets in the condensed consolidated balance sheets. The current operating lease liabilities and non-current lease liabilities are included in other current liabilities and deferred credits and other non-current liabilities, respectively, in the condensed consolidated balance sheets. The expense components of the Company’s operating leases are included under operations and maintenance expense in the condensed consolidated statements of income and were less than $50,000 for each period presented.

Other information related to leases were as follows:

On* June 30, 2026*, the future minimum rental payments under non-cancelable operating leases by fiscal year were as follows:

The Company has evaluated subsequent events through the date the financial statements were issued. There wereno itemsnot otherwise disclosed which would have materially impacted the Company's condensed consolidated financial statements.

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