Energy Services of America CORP Leases Disclosure
21. | LEASE OBLIGATIONS |
The Company leases office space for SQP for $1,500 per month. The lease, which was originally signed on March 25, 2021, is for a period of two years with five one-year renewals available immediately following the end of the base term. As of September 30, 2025, the Company has only committed to one-year renewals and is evaluating whether to renew for additional periods.
The Company has two right-of-use operating leases acquired on April 29, 2022, as part of the Tri-State Paving, LLC transaction. The first operating lease, for the Hurricane, West Virginia facility, had a net present value of $236,000 at inception, and a carrying value of $0 at September 30, 2025. The 4.5% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception. The Company signed a one-year renewal after the lease expired and as of September 30, 2025 is evaluating whether to renew for additional periods.
The second operating 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 a two-year period with a net present value of $140,000 and had a carrying value of $50,000 at September 30, 2025. The 8.5% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception.
The Company has a right-of-use operating lease with Enterprise acquired on August 11, 2022, as part of the Ryan Environmental acquisition. This lease agreement was initially for thirty-one vehicles with a net present value of $1.2 million. The Company subsequently netted fifty-one additional leased vehicles. The right-of-use operating lease had a carrying value of $1.9 million at September 30, 2025. Each vehicle leased under the master lease program has its own implicit rate.
The Company has a right-of-use operating lease acquired on March 28, 2023. This lease, for the Winchester, Kentucky facility, had a net present value of $290,000 at inception and a carrying value of $44,000 at September 30, 2025. The 7.5% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception.
Schedules related to the Company’s operating leases at fiscal year ended September 30, 2025 can be found below:
Operating Lease-Weighted Average Remaining Term | |||||||||
Years left | | Remaining liability | | Lease end | | Fiscal year end | |||
Operating lease 1 |
| 0.0 | $ | — |
| 3/31/2025 |
| 2025 | |
Operating lease 2 |
| 0.5 |
| 50,137 |
| 8/31/2026 |
| 2026 | |
Operating lease 3 |
| 3.5 |
| 1,949,038 |
| 9/30/2028 |
| 2028 | |
Operating lease 4 |
| 0.0 |
| — |
| 9/30/2024 |
| 2024 | |
Operating lease 5 | 0.8 | 44,467 | 3/31/2026 | 2026 | |||||
$ | 2,043,642 | ||||||||
Weighted average remaining term |
| 3.4 | years | |
| | |||
Operating Lease Maturity Schedule | | | |
2026 | $ | 1,291,116 | |
2027 |
| 799,632 | |
2028 |
| 308,279 | |
2029 |
| 101,426 | |
| 2,500,453 | ||
Less amounts representing interest |
| (456,811) | |
Present value of operating lease liabilities | $ | 2,043,642 |
| Twelve Months Ended | | Twelve Months Ended | |||
September 30, | September 30, | |||||
Operating Lease Expense |
| 2025 | 2024 | |||
Amortization | ||||||
Operating lease 1 | $ | 45,833 | $ | 87,167 | ||
Operating lease 2 |
| 72,564 | 74,042 | |||
Operating lease 3 |
| 885,178 | 688,869 | |||
Operating lease 4 |
| — | 124,701 | |||
Operating lease 5 | 116,461 | 101,243 | ||||
Total amortization |
| 1,120,036 | 1,076,022 | |||
Interest |
| |||||
Operating lease 1 | $ | 545 | $ | 3,833 | ||
Operating lease 2 |
| 7,661 | 1,892 | |||
Operating lease 3 |
| 220,615 | 219,414 | |||
Operating lease 4 |
| — | 4,899 | |||
Operating lease 5 |
| 6,847 | 14,250 | |||
Total interest | 235,668 | 244,288 | ||||
Total amortization and interest | $ | 1,355,704 | $ | 1,320,310 | ||
| Twelve Months Ended | | Twelve Months Ended | |||
September 30, | September 30, | |||||
Cash Paid for Operating Leases | 2025 | 2024 | ||||
Operating lease 1 | $ | 46,378 | $ | 91,000 | ||
Operating lease 2 |
| 80,225 | 75,934 | |||
Operating lease 3 |
| 1,105,793 | 908,283 | |||
Operating lease 4 |
| — | 129,600 | |||
Operating lease 5 | 123,308 | 115,493 | ||||
$ | 1,355,704 | $ | 1,320,310 | |||
The Company rents equipment for use on construction projects with rental agreements being 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 expense, which is included in cost of goods sold on the consolidated statements of income, was $16.3 million and $22.9 million for the years ended September 30, 2025, and 2024, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 15, 2025 | Showing above |
| 2024 | Dec 19, 2024 | |
| 2023 | Jan 16, 2024 | |
| 2022 | Dec 22, 2022 | |
| 2021 | Dec 29, 2021 | |
| 2020 | Jan 5, 2021 | |
| 2019 | Dec 20, 2019 | |
| 2018 | Dec 28, 2018 | |
| 2017 | Dec 15, 2017 | |
| 2016 | Dec 15, 2016 | |
| 2015 | Dec 17, 2015 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.