ESOA 10-K & 10-Q changes, risk factors and insider trading

We typically experience lower volumes and lower margins during the winter months due to lower demand for our pipelineconstruction services and more difficult operating conditions. Also, other items that can materially affect our quarterly results include:

On September 30, 2025, the Company acquired the assets of Rigney Digital Systems Ltd. and on December 2, 2024, the Company completed the acquisition ofacquired the assets of Tribute Contracting & Consultants, LLC. In fiscal 2022, the Company completed the acquisitions of Tri-State Paving and Ryan Construction. The Company may continue to expand by making additional acquisitions that could be material to its business, results of operations, financial condition and cash flows. Acquisitions involve many risks, including the following:

Although we take protective measures and believe that we have not experienced any of the data breaches described above, the security of our computer systems, software, and networks may be vulnerable to breaches, unauthorized access, misuse, computer viruses, or other malicious code and cyber-attacks that could have an impact on information security. Because the techniques used to cause security breaches change frequently, we may be unable to proactively address these techniques or to implement adequate preventative measures.

Inflation risk is the risk that the value of assets or income will be worth less in the future as inflation decreases the value of money. Over the last several years, there have been market indicators of a pronounced rise in inflation and the Federal Reserve has raised certain benchmark interest rates to combat inflation. Inflation generally increases the cost of goods and services we will use in our business operations, such as electricity and other utilities, which increases our expenses. In addition, we may have to increase both wages to retain our employees and the cost of our services by a greater amount than we have budgeted. Furthermore, our customers will also be affected by inflation and the rising costs of goods and services used in their businesses, which could have a negative impact on their ability to use our services and afford to pay our fees.

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 September 30, 2025, there have been no further requests or communications from the SBA relating to the PPP Loans.

In addition to the effects of an economic recession, there could be reductions in the industries that the Company serves. If the demand for natural gas should drop dramatically, or the demand for water, electrical and mechanical services drops dramatically, these would in turn result in less demand for the Company’s services.

In certain circumstances, we guarantee project completion by a scheduled acceptance date or are paid only upon achievement of certain acceptance and performance testing levels. Failure to meet any of these requirements could result in additional costs or penalties which could exceed the expected project profits.profits and adversely impact the Company’s results of operations.

Our industry has been and remains competitive with competitors ranging from small owner operatedowner-operated companies to large public companies. Within that group there may be companies with lower overhead costs that may be able to price their services at lower levels than we can. Accordingly, if that occurs, our business opportunities could be severely limited. In addition, our industry competes for energy demand with suppliers of alternative energy sources such as solar and wind.

OnIn AugustJuly 8, 2024,2025, the Company renewed its $30.0 million line of credit with a maturity date of June 28, 2026.2027. The line of credit is limited to a borrowing base calculation, which was approximately $25.1$27.7 million at September 30, 2024.2025. The outstanding balance on the line of credit was $4.5$24.8 million at September 30, 2024.2025. The line of credit has a variable interest rate equal to the “Wall Street Journal” Prime Rate with a floor of 4.5%,4.99%, which was 8.0%7.25% at September 30, 2024.2025.

The holders of our common stock will receive cash dividends if and when declared by our board of directors out of legally available funds. Although we paid an annual cash dividend in calendar 2024 and have initiated a regular quarterly cash dividend of $0.03 per share in fiscal 2025, we have no obligation to continue paying dividends. Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including our future earnings, capital requirements, financial condition, future prospects, and other factors that our board of directors may deem relevant. Our ability to pay dividends to our stockholders will continue to be subject to, and limited by, certain legal restrictions. Further, any lenders making loans to us may impose financial covenants that may be more restrictive with respect to dividend payments than our legal requirements.

Companies are facing increasing scrutiny from customers, regulators, investors, and other stakeholders related to their environmental, social and governance (“ESG”) practices and disclosure. Investor advocacy groups, investment funds and influential investors are also increasingly focused on these practices, especially as they relate to the environment, health and safety, diversity, labor conditions and human rights. Increased ESG-related compliance costs could result in increases to our overall operational costs. Failure to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation, ability to do business with certain partners, and our stock price. New government regulations could also result in new or more stringent forms of ESG oversight and expanding mandatory and voluntary reporting, diligence, and disclosure.

Gas & Water Distribution revenues totaled $149.6 million for the fiscal year ended September 30, 2025, a $67.1 million increase from $82.4 million for the fiscal year ended September 30, 2024, an $18.9 million increase from $63.5 million for the fiscal year ended September 30, 2023.2024. The revenue increase was primarily related to the Company’s continued focus on increasing water project opportunities.

Gas & Petroleum Transmission gross profitrevenues totaled $11.6$64.6 million for the fiscal year ended September 30, 2024,2025, a $1.1$16.5 million decrease from $12.7$81.1 million for the fiscal year ended September 30, 2023.2024. The gross profitrevenue decrease was primarily related to lessbid transmissionopportunities workreceived performedlater in the current fiscal year endedand Septembera 30,significant 2024decrease in natural gas project awards as compared to the priorprevious fiscal year.

Electrical, Mechanical, & General services and construction gross profitrevenues totaled $20.8$196.8 million for the fiscal year ended September 30, 2024,2025, aan $10.1$8.4 million increase from $10.7$188.4 million for the fiscal year ended September 30, 2023.2024. The gross profitrevenue increase was primarily related to aincreased largemechanical and electrical maintenance services performed and an increase in new construction electrical project that resulted in higher than expected profits and increased profits in general contractor opportunities during the fiscal year ended September 30, 2024,2025, as compared to the prior fiscal year.

InterestTotal Expense.cost Interestof expenserevenues decreasedincreased by $218,000$70.3 million, or (9.1%)23.3%, to $2.2$372.2 million for the fiscal year ended September 30, 2024,2025, from $2.4$301.9 million for the fiscal year ended September 30, 2023.2024. ThisThe increase was the result of increased work in the Electrical, Mechanical, and General and Gas & Water Distribution business lines, partially offset by a decrease wasin primarilyGas due& toPetroleum lowerTransmission line of credit borrowings during the fiscal year ended September 30, 2024.work.

TheUnallocated incomeshop taxexpenses expensetotaled for the fiscal year ended September 30, 2024 was $8.4 million as compared to $3.0$4.6 million for the fiscal year ended September 30, 2023.2025, Thea $3.0 million increase wasfrom due$1.6 tomillion an increase in taxable income infor the fiscal year ended September 30, 2024,2024. The increase in unallocated shop expenses was primarily due to decreased internal equipment charges to projects for the fiscal year ended September 30, 2025, as compared to the prior fiscal year.

NetTotal incomegross forprofit thedecreased fiscalby year ended September 30, 2024 was $25.1$11.2 million comparedor 22.4% to $7.4$38.8 million for the fiscal year ended September 30, 2023.2025, Thefrom increase$50.0 wasmillion due tofor the itemsfiscal mentionedyear above.ended September 30, 2024.

The Company had consolidated operating revenues of $93.2$130.0 million for the three months ended MarchJune 31,30, 2026, of which 54.6%46.6% was attributable to electrical, mechanical, and general contract services, 11.8%16.3% to gas and petroleum transmission projects, and 33.6%37.1% to gas & water distributions services. The Company had consolidated operating revenues of $76.7$103.6 million for the three months ended MarchJune 31,30, 2025, of which 60.3%48.0% was attributable to electrical, mechanical, and general contract services, 4.4%14.8% to gas and petroleum transmission projects, and 35.3%37.2% to gas & water distributions services.

The Company had consolidated operating revenues of $207.3$337.3 million for the sixnine months ended MarchJune 31,30, 2026, of which 48.3%47.7% was attributable to electrical, mechanical, and general contract services, 17.0%16.7% to gas and petroleum transmission projects, and 34.7%35.6% to gas & water distributions services. The Company had consolidated operating revenues of $177.3$280.9 million for the sixnine months ended MarchJune 31,30, 2025, of which 54.8%52.3% was attributable to electrical, mechanical, and general contract services, 12.3%13.2% to gas and petroleum transmission projects, and 32.9%34.5% to gas & water distributions services.

Three and sixnine months ended MarchJune 31,30, 2026 and 2025 Overview

The following is an overview of results from operations for the three and sixnine months ended MarchJune 31,30, 2026 and 2025:

Results of Operations for the Three and SixNine Monthsmonths Endedended MarchJune 31,30, 2026 Compared to the Three and SixNine Monthsmonths Endedended MarchJune 31,30, 2025

Revenues. The following table compares the Company’s revenues for the three and sixnine months ended MarchJune 31,30, 2026 to the corresponding periods in 2025:

Total revenues increased by $16.5$26.4 million to $93.2$130.0 million for the three months ended MarchJune 31,30, 2026, compared to $76.7$103.6 million for the three months ended MarchJune 31,30, 2025. For the sixnine months ended MarchJune 31,30, 2026, total revenues increased by $30.0$56.4 million to $207.3$337.3 million, compared to $177.3$280.9 million for the same period in 2025. These increases wereprimarily driven byreflected higher revenuesactivity levels across alleach of the Company’s principal business lines during the three- and six-monthnine-month periods ended MarchJune 31,30, 2026, compared to the corresponding periods in 2025.2026.

Gas & Water Distribution revenues were $31.3$48.3 million for the three months ended MarchJune 31,30, 2026, an increase of $4.2$9.7 million from $27.1$38.6 million for the three months ended MarchJune 31,30, 2025. For the sixnine months ended MarchJune 31,30, 2026, revenues were $71.9$120.2 million, an increase of $13.5$23.2 million from $58.4$97.0 million for the same period in 2025. These increases were primarily attributabledue to higher levels ofincreased water distribution servicesconstruction performedactivity during the 2026 periods.

Gas & Petroleum Transmission revenues were $11.0$21.2 million for the three months ended MarchJune 31,30, 2026, an increase of $7.6$5.9 million from $3.4$15.3 million for the three months ended MarchJune 31,30, 2025. For the sixnine months ended MarchJune 31,30, 2026, revenues were $35.1$56.4 million, an increase of $13.3$19.2 million from $21.9$37.2 million for the same period in 2025. These increases were primarily due to new transmission projects awarded induring the first quarter of fiscal 2026,2026 asand wellmore as the timing offavorable project execution,timing, withas most transmission work in fiscal 2025 commencingcommenced induring the third fiscal quarter.

Electrical, Mechanical, & General Construction Services revenues were $50.8$60.5 million for the three months ended MarchJune 31,30, 2026, an increase of $4.6$10.8 million from $46.2$49.7 million for the three months ended MarchJune 31,30, 2025. For the sixnine months ended MarchJune 31,30, 2026, revenues were $100.2$160.7 million, an increase of $3.1$13.9 million from $97.1$146.8 million for the same period in 2025. These increases were primarily attributabledue to higher levels ofincreased electrical servicesconstruction performedactivity during the 2026 periods.

Cost of Revenues. The following table compares the Company’s cost of revenues for the three and sixnine months ended MarchJune 31,30, 2026 to the corresponding periods in 2025:

Total cost of revenues increased by $6.3$24.1 million to $82.9$115.7 million for the three months ended MarchJune 31,30, 2026, compared to $76.6$91.6 million for the three months ended MarchJune 31,30, 2025. For the sixnine months ended MarchJune 31,30, 2026, total cost of revenues increased by $16.1$40.1 million to $183.1$298.7 million, compared to $167.0$258.6 million for the same period in 2025. These increases were primarily attributable toreflected higher activity levels across each of workthe acrossCompany’s allprincipal business lines during the 2026 periods, partially offset by a $312,000 decrease in cost of revenues for Electrical, Mechanical,three- and Generalnine-month Construction Services for the six monthsperiods ended MarchJune 31,30, 2026.

Gas & Water Distribution cost of revenues was $29.0$40.2 million for the three months ended MarchJune 31,30, 2026, an increase of $962,000$8.3 million from $28.0$31.9 million for the prior-year period. For the sixnine months ended MarchJune 31,30, 2026, cost of revenues was $63.1$103.3 million, an increase of $8.9$17.2 million from $54.1$86.0 million for the same period in 2025. These increases were primarily attributabledue to higher levels ofincreased water distribution activity.construction activity during the 2026 periods.

Gas & Petroleum Transmission cost of revenues was $8.5$21.2 million for the three months ended MarchJune 31,30, 2026, an increase of $3.9$7.0 million from $4.6$14.2 million for the prior-year period. For the sixnine months ended MarchJune 31,30, 2026, cost of revenues was $28.8$50.0 million, an increase of $6.7$13.7 million from $22.1$36.3 million for the same period in 2025. These increases were primarily due to newhigher transmissionconstruction activity on projects awarded induring the first quarter of fiscal 20262026, andtogether thewith timingmore offavorable project execution,timing, as most transmission work in fiscal 2025 commenced induring the third fiscal quarter.

Electrical, Mechanical, & General Construction Services grosscost profitof revenues was $7.2$53.4 million for the three months ended MarchJune 31,30, 2026, an increase of $3.4$8.9 million from $3.8$44.4 million for the prior-year period. For the sixnine months ended MarchJune 31,30, 2026, grosscost profitof revenues was $12.0$141.5 million, an increase of $3.4$8.6 million from $8.6$132.9 million for the same period in 2025. These increases were primarily attributabledue to improvedincreased marginselectrical onconstruction relativelyactivity consistentduring levelsthe of2026 work performed.periods.

Gross loss attributable to unallocatedUnallocated shop expenses waswere $1.8 million$879,000 for the three months ended MarchJune 31,30, 2026, ana increasedecrease of $235,000$215,000 from $1.6$1.1 million for the prior-year period. For the sixnine months ended MarchJune 31,30, 2026, gross loss attributable to unallocated shop expenses waswere $3.0$3.9 million, an increase of $805,000$590,000 from $2.2$3.3 million for the same period in 2025. The increasedecrease for the three months ended June 30, 2026 as compared to the same period in 2025 was primarily due to increased internal equipment charges to projects. The increase for the nine months ended June 30, 2026 periodsas compared to the same period in 2025 was primarily due to higher depreciation, insurance, and equipment repair costs, without a corresponding increase in internal equipment charges to projects during the 2026 periods.projects.

Selling and administrative expenses. Total sellinggross and administrative expensesprofit increased by $1.0$2.3 million to $9.2$14.3 million for the three months ended MarchJune 31,30, 2026, compared to $8.2$12.0 million for the samethree periodmonths inended June 30, 2025. For the sixnine months ended MarchJune 31,30, 2026, total sellinggross and administrative expensesprofit increased by $1.5$16.2 million to $18.3$38.5 million, compared to $16.8$22.3 million for the same period in 2025. These increases in gross profit were primarily attributabledriven toby higher laboractivity levels and relatedgenerally burdenimproved costsproject associatedexecution withacross the Company’s growth.principal business lines during the three- and nine-month periods ended June 30, 2026. The increase in gross profit for the three-month period was partially offset by lower margins on a large project within the Gas & Petroleum Transmission business line.

OtherSelling non-operatingand expense.administrative Otherexpenses. non-operatingTotal selling and administrative expenses wereincreased $94,000by $875,000 to $9.7 million for the three months ended MarchJune 31,30, 2026, compared to $21,000$8.8 million for the same period in 2025. For the sixnine months ended MarchJune 31,30, 2026, othertotal non-operatingselling and administrative expenses wereincreased $197,000,by $2.3 million to $27.9 million, compared to $69,000$25.6 million for the same period in 2025. TheThese increases were primarily attributable to amortizationhigher oflabor intangibleand assetsrelated burden costs associated with anthe acquisitionCompany’s completedgrowth. onSelling Septemberand 30,administrative 2025.expenses increased at a slower rate than revenues during both periods, reflecting improved operating leverage as the Company expanded its operations.

NetOther incomenon-operating (loss).expense. IncomeOther (loss)non-operating beforeexpenses incomewere taxes was $412,000$118,000 for the three months ended MarchJune 31,30, 2026, compared to a loss of $9.0 million$39,000 for the same period in the prior year.2025. For the sixnine months ended MarchJune 31,30, 2026, incomeother beforenon-operating incomeexpenses taxeswere was $4.3 million,$315,000, compared to a loss of $7.7 million$107,000 for the same period in the2025. prior year. TheseThe increases were primarily attributablereflected toamortization of intangible assets associated with the factorsacquisition discussedcompleted above.on September 30, 2025.

Income tax(loss) expensebefore income taxes. Income before income taxes was $197,000$4.0 million for the three months ended MarchJune 31,30, 2026, compared to an income tax benefit of $2.2 million for the same period in the prior year. For the sixnine months ended MarchJune 31,30, 2026, income taxbefore expenseincome taxes was $1.3$8.3 million, compared to ana loss before income tax benefittaxes of $1.8$5.5 million for the same period in the prior year. TheThese increase in income tax expense wasimprovements primarily due toreflected higher pre-taxrevenues, incomeimproved project profitability, and lower interest expense during the 2026 periods.

Net income (loss). Net income was $216,000$3.3 million for the three months ended MarchJune 31,30, 2026, compared to a net loss of $6.8$2.1 million for the same period in the prior year. For the sixnine months ended MarchJune 31,30, 2026, net income was $2.9$6.2 million, compared to a net loss of $5.9$3.9 million for the same period in the prior year. The improvements in net income primarily reflected higher revenues, improved gross profit, and lower interest expense during the 2026 periods.

Variance Between Three Months Ended MarchJune 31,30, 2026 and 2025

Variance Between SixNine Months Ended MarchJune 31,30, 2026 and 2025

Revenues. TheRevenues $13.7increased by $16.1 million and $30.0$46.1 million increases in revenues for the three and sixnine months ended MarchJune 31,30, 20262026, asrespectively, compared to the same periods in 20252025. wereThe increases primarily duereflected tohigher construction activity within the Company’s focus on growing its natural gas and water distribution business lines.lines, Additionally,together with the earlier commencement of natural gas transmission projects started earlier induring fiscal year 2026 as compared to fiscal year 2025.2026.

Income from operations. The $8.1 million and $11.6 million increases in incomeIncome from operations increased by $304,000 and $11.9 million for the three and sixnine months ended MarchJune 31,30, 20262026, asrespectively, compared to the same periodperiods in 20252025. wereThe increases primarily duereflected tohigher anconstruction increasedactivity, volumetogether ofwith workimproved andproject profitabilityexecution fromacross the Company’s underground infrastructure projects.operations.

Revenues. TheRevenues $3.7increased by $9.6 million and $2.1$11.7 million increases in revenues for the three and sixnine months ended MarchJune 31,30, 20262026, asrespectively, compared to the same periods in 20252025. wereThe increases primarily duereflected tohigher an increase in the amountlevels of electrical and mechanical workconstruction performed.activity.

Income from operations. TheIncome $2.1from operations increased by $2.2 million and $1.8$4.0 million increases in income from operations for the three and sixnine months ended MarchJune 31,30, 20262026, asrespectively, compared to the same periodperiods in 20252025. wereThe increases primarily duereflected toimproved anproject increaseexecution, inhigher industrialproject workmargins, and ana increasemore inprofitable profitability.mix of electrical and mechanical construction work.

Income from operations. The $1.0 million and $1.1 million decreases in incomeIncome from operations decreased by $684,000 and $1.8 million for the three and sixnine months ended MarchJune 31,30, 20262026, asrespectively, compared to the same periodperiods in 20252025. wereThe decreases primarily duereflected tolower theproject decreasedprofitability volumeand reduced absorption of workfixed completedoperating incosts theas Company’snewly firstawarded quarterprojects oftransitioned into active construction during fiscal year 2026.

Corporate and Non-Allocatednon-allocated Costscosts increased by $113,000$320,000 and $205,000 for the three months ended March 31, 2026 and decreased by $123,000 for the sixnine months ended MarchJune 31,30, 2026, respectively, as compared to the same periods in 2025. The variancesincreases areprimarily attributedreflected toadditional variouspersonnel factors;costs however,associated with the Companyexpansion hasof addedthe additionalCompany’s corporate safety and risk management personnelfunctions, atpartially theoffset by normal fluctuations in other corporate level.overhead costs.

The Company’s disaggregated revenue doespresentation varydiffers slightly from theits Company’sreportable segment reportingpresentation due to combiningbecause the Industrial Construction and Building Construction intoreportable segments are combined within the Electrical, Mechanical and General,General andrevenue category. In addition, one legal entity inwithin the Underground Infrastructure Construction reportable segment that performs certain services other than underground construction that are includedclassified inwithin the Electrical, Mechanical and General.General Therevenue volumecategory. ofThese thesedifferences services isare not material to the Company’s reportable segment reporting.results.

Comparison of Financial Condition at MarchJune 31,30, 2026 and September 30, 2025