UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


FORM
10-Q/A


Amendment
No. 1




(Mark
One)


x Quarterly
      report under Section 13 or 15(d) of the Securities Exchange Act of
      1934For
      the quarterly period ended December 31, 2008o Transition
      report under Section 13 or 15(d) of the Securities Exchange act of
      1934For
      the transition period from _______________ to
      _________________Commission
      File Number:
001-32998




Energy
      Services of America Corporation(Exact
      Name of Registrant as Specified in its
Charter)




Delaware
                            
                            
                            
                            20-4606266(State
      or Other Jurisdiction of Incorporation or Organization)
                            
                            
                            (I.R.S.
      Employer  Identification Number)




100
      Industrial Lane, Huntington, West Virginia
                                
                                
                                
                                25702(Address
      of Principal Executive Office)
                                
                                
                                (Zip
      Code)




(304)
      399-6315(Registrant’s
      Telephone Number including area
code)





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




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


Large Accelerated
      Filer o
            Accelerated Filer
      o
            Non-Accelerated
      Filer o
            Smaller Reporting
      Company x




As of
February 10, 2009 there were issued and outstanding 12,092,307 shares of the
Registrant’s Common Stock.




Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). YES o NO x




Transitional Small
Business Disclosure Format (check one) Yes o No x




EXPLANATORY
NOTE




Energy
Services of America Corporation is filing this Amendment to its Quarterly Report
on Form 10-Q for the period ended December 31, 2008 (the “Quarterly Report”) to
correct certain disclosure errors identified during a regulatory review of the
Company’s Securities and Exchange Commission filings. This Form 10-Q/A only
amends disclosures to correct the certifications pursuant to Exchange Act Rules
13a-14(a) and 15d-14(a) and revise the notes to pro forma income statement as
previously disclosed in Item 2.




This
Amendment does not reflect events that have occurred after the filing date of
the Quarterly Report on Form 10-Q that the Company originally filed with the
Securities and Exchange Commission on February 17, 2009, or modify or update the
disclosures presented in the original Form 10-Q, except to reflect the
corrections described above. Accordingly, this Form 10-Q/A should be read in
conjunction with our filings with the Securities and Exchange Commission
subsequent to the filing of the original Form 10-Q.







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




You
should read the following discussion of the financial condition and results of
operations of Energy Services in conjunction with the “Unaudited Pro Forma
Consolidated Financial information “ appearing in this section of this report as
well as the historical financial statements and related notes contained
elsewhere herein. Among other things, those historical consolidated financial
statements include more detailed information regarding the basis of presentation
for the following information.




Forward
Looking Statements




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




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




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




Overview




Energy
Services was formed on March 31, 2006, to serve as a vehicle to effect a merger,
capital stock exchange, asset acquisition or other similar business combination
with an operating business. It operated as a “Blank Check Company” until August
15, 2008 at which time it completed the acquisitions of S.T. Pipeline, Inc. and
C.J. Hughes Construction Company, Inc. S.T. Pipeline and C.J. Hughes are
considered predecessor companies to Energy Services. The discussion of financial
condition and operating results include the results of the two predecessors
prior to the acquisition. This discussion is based in part on pro-forma income
statement information. The Company acquired S.T. Pipeline for $16.2 million in
cash and $3.0 million in a promissory note. The C.J. Hughes purchase price
totaled $34 million, one half of which was in cash and one half in Energy
Services common stock. The acquisitions are accounted for under the purchase
method and the financial results of both acquisitions are included in the
results of Energy Services from the date of acquisition.




Since
the acquisitions, Energy Services has been engaged in one segment of operations
which is providing contracting services for energy related companies. Currently
Energy Services primarily services the Gas, Oil and Electrical industries though
it does some other incidental work. 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 Electrical industry, the Company provides a
full range of electrical installations and repairs including substation and
switchyard services, site preparation, packaged buildings, transformers and
other ancillary work with regards thereto. Energy Services’ other services
include liquid pipeline construction, pump station construction, production
facility construction, water and sewer pipeline installations, various
maintenance and repair services and other services related to pipeline
construction. The majority of the Company’s customers are located in West
Virginia, Virginia, Ohio, Kentucky and North Carolina. The Company builds, but
does not own, natural gas pipelines for its customers that are part of both
interstate and intrastate pipeline systems that move natural gas from producing
regions to consumption regions as well as building and replacing gas line
services to individual customers of the various utility companies.


2




The
Company enters into various types of contracts, including competitive unit
price, cost-plus (or time and materials basis) and fixed price (lump sum)
contracts. The terms of the contracts will vary from job to job and customer to
customer though most contracts are on the basis of either unit pricing in which
the Company agrees to do the work for a price per unit of work performed or for
a fixed amount for the entire project. Most of the Company’s projects are
completed within one year of the start of the work. On occasion, the Company’s
customers will require the posting of performance and/or payment bonds upon
execution of the contract, depending upon the nature of the work
performed.




The
Company generally recognizes revenue on unit price and cost-plus contracts when
units are completed or services are performed. Fixed price contracts usually
results in recording revenues as work on the contract progresses on a percentage
of completion basis. Under this accounting method, revenue is recognized based
on the percentage of total costs incurred to date in proportion to total
estimated costs to complete the contract. Many contacts also include retainage
provisions under which a percentage of the contract price is withheld until the
project is complete and has been accepted by the customer.




Seasonality:
Fluctuation of Results




Our
revenues and results of operations can and usually are subject to seasonal
variations. These variations are the result of weather, customer spending
patterns, bidding seasons and holidays. The second fiscal quarter of the year is
typically the slowest in terms of revenues because inclement weather conditions
cause delays in production and customers usually do not plan large projects
during that time. While usually better than the second fiscal quarter, the first
fiscal quarter often has some inclement weather which can cause delays in
production, reducing the revenues the Company receives and/or increasing the
production costs. Also in the first quarter there are holidays which can limit
production. The third fiscal quarter usually is least impacted by weather and
usually has the largest number of projects underway.




In
addition to the fluctuations discussed above, the pipeline industry can be
highly cyclical, reflecting variances in capital expenditures in relation to
energy price fluctuations. As a result, our volume of business may be adversely
affected by where our customers’ businesses are in relation to energy
infrastructure expenditures and thereby their financial condition as to their
capital needs and access to capital to finance those needs.




Accordingly,
our operating results in any particular quarter or year may not be indicative of
the results that can be expected for any other quarter or any other year. You
should read “Understanding
Gross Margins” and “Outlook”
below for discussions of trends and challenges that may affect our financial
condition and results of operations.




Understanding
Gross Margins




Our
gross margin is gross profit expressed as a percentage of revenues. Cost of
revenues consists primarily of salaries, wages and some benefits to employees,
depreciation, fuel and other equipment, equipment rentals, subcontracted
services, portions of insurance, facilities expense, materials and parts and
supplies. Various factors, some controllable, some not impact our gross margin
on a quarterly or annual basis.




Seasonal.As discussed above, seasonal patterns can have a significant impact on
gross margins. Usually, business is slower in the winter months versus the
warmer months.




Weather.Adverse or favorable weather conditions can impact gross margin in a
given period. Periods of wet weather, snow or rainfall, as well severe
temperature extremes can severely impact production and therefore negatively
impact revenues and margins. Conversely, periods of dry weather with moderate
temperatures can positively impact revenues and margins due to the opportunity
for increased production and efficiencies.  3




Revenue
Mix.The mix of revenues between customer types and types of work for
various customers will impact gross margins. Some projects will have more
margins while others that are extremely competitive in bidding may have narrower
margins.




Service
and Maintenance versus installation.In general, installation work has a
higher gross margin than maintenance work. This is due to the fact that
installation work usually is more of a fixed price nature and therefore has
higher risks involved. Accordingly, a higher portion of the revenue mix from
installation work typically will result in higher margins.




Subcontract
work. Work that is subcontracted to other service providers generally has
lower gross margins. Increases in subcontract work as a percentage of total
revenues in a given period may contribute to a decrease in gross
margin.




Materials
versus Labor. Typically materials supplied on projects have smaller
margins than labor. Accordingly, projects with a higher material cost in
relation to the entire job will have a lower overall margin.




Depreciation.Depreciation is included in our cost of revenue. This is a common
practice in the energy services industry, but can make comparability to other
companies difficult.




Selling,
General and Administrative Expenses




Selling,
general and administrative expenses consist primarily of compensation and
related benefits to management, administrative salaries and benefits, marketing,
communications, office and utility costs, professional fees, bad debt expense,
letter of credit fees, general liability insurance and miscellaneous other
expenses.




Results
of Operations




Because
the Company had no operations during the three months ended December 31, 2007
the information set forth below for the three months ended December 31, 2007 and
the corresponding analysis of the comparative three months ended December 31,
2008 and December 31, 2007 is based on actual results for the three months ended
December 31, 2008 and pro forma results as of December 31, 2007. This
information is based upon and should be read in conjunction with the more
detailed information included in the section titled “Unaudited Pro Forma
Consolidated Financial Information.”  4




Energy
Services of America Corporation


ST
Pipeline, Inc./C J Hughes


(Unaudited)
                  Three
      Months
                  Ended
                  December
      31,
                  2008
                
                
                Percent
                
                
                Pro
      Forma
                  Three
      Months
                  Ended
                  December
      31,
                  2007
                
                
                PercentContract
      Revenues
                
                $
                33,679,046
                
                
                
                100.0
                %
                
                $
                62,747,854
                
                
                
                100.0
                %Cost
      of Revenues
                
                
                35,275,121
                
                
                
                104.7
                %
                
                
                45,164,879
                
                
                
                72.0
                %Gross
      Profit (Loss)
                
                
                (1,596,075
                )
                
                
                -4.7
                %
                
                
                17,582,975
                
                
                
                28.0
                %General
      and administrative expenses
                
                
                1,714,750
                
                
                
                5.1
                %
                
                
                1,428,602
                
                
                
                2.3
                %Net
      income (loss) from operations before taxes
                
                
                (3,310,825
                )
                
                
                -9.8
                %
                
                
                16,154,373
                
                
                
                25.7
                %Interest
      Income
                
                
                36,273
                
                
                
                0.1
                %
                
                
                428,700
                
                
                
                0.7
                %Interest
      Expense
                
                
                (416,772
                )
                
                
                -1.2
                %
                
                
                (460,507
                )
                
                
                -0.7
                %Other
      Income (Expense)
                
                
                154,251
                
                
                
                0.5
                %
                
                
                274,536
                
                
                
                0.4
                %Net
      Income (Loss) before tax
                
                
                (3,537,073
                )
                
                
                -10.5
                %
                
                
                16,397,103
                
                
                
                26.1
                %Income
      taxes (benefit)
                
                
                (1,342,564
                )
                
                
                -4.0
                %
                
                
                6,564,867
                
                
                
                10.5
                %Net
      Income (Loss)
                
                
                (2,194,509
                )
                
                
                -6.5
                %
                
                
                9,832,235
                
                
                
                15.7
                %Weighted
      average shares outstanding- basic
                
                
                12,092,307
                
                
                
                
                
                
                
                12,092,307Weighted
      average shares- diluted
                
                
                12,092,307
                
                
                
                
                
                
                
                14,535,525Net
      income (Loss) per share- basic
                
                $
                (0.18
                )
                
                
                
                
                
                $
                0.81Net
      income (Loss) per share- diluted
                
                $
                (0.18
                )
                
                
                
                
                
                $
                0.68




UNAUDITED
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION




The
following tables set forth summary financial information for our pro forma
consolidated results for the three months ended December 31, 2007. The
information is presented to show what the consolidated income statements would
have looked like had the transactions with S.T. Pipeline and C.J. Hughes been
completed at the beginning of that period. The information includes such
adjustments as deemed necessary to reflect the transactions in a proper manner.
This information should be read in conjunction with the notes thereto as well as
the financial statements for the various entities included elsewhere in this
document.




The
unaudited pro forma information is for informational purposes only and is not
intended to represent or be indicative of the consolidated results of operations
that we would have reported had the merger transactions been completed as of the
date presented and should not be taken as representative of our future
consolidated results of operations.  5




Energy
Services of America Corporation


ST
Pipeline, Inc./C J Hughes


Pro
Forma Combined, Condensed, Consolidated Statement of Income


Energy
      Services of
                                                                      America
      Corporation
                                                                      Three
      months ended
                                                                      December
      31, 2007
                                                                    
                                                                    ST
      Pipeline
                                                                      Three
      months
                                                                      Ended
                                                                      December
      31.
                                                                      2007
                                                                    
                                                                    ST
      Pipeline
                                                                      Pro
      Forma
                                                                      Adjustments
                                                                    
                                                                    C
      J Hughes
                                                                      Three
      months
                                                                      Ended
                                                                      December
      31.
                                                                      2007
                                                                    
                                                                    C
      J Hughes
                                                                      Pro
      Forma
                                                                      Adjustments
                                                                    
                                                                    Redemption
                                                                      Adjustments
                                                                    
                                                                    Pro
      Forma
                                                                      Combined(Unaudited)
                                                                    
                                                                    (Unaudited)
                                                                    
                                                                    
                                                                    
                                                                    (Unaudited)Contract
      Revenues
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    $
                                                                    37,520,704
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    $
                                                                    25,227,150
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    $
                                                                    62,747,854Cost
      of Revenues
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    22,409,224
                                                                    
                                                                    $
                                                                    302,703
                                                                    (1)
                                                                    
                                                                    22,248,923
                                                                    
                                                                    $
                                                                    204,028
                                                                    (1)
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    45,164,879Gross
      Profit
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    15,111,480
                                                                    
                                                                    
                                                                    (302,703
                                                                    )
                                                                    
                                                                    2,978,227
                                                                    
                                                                    
                                                                    (204,028
                                                                    )
                                                                    
                                                                    —
                                                                    
                                                                    
                                                                    17,582,975General
      and administrative expenses
                                                                    
                                                                    $
                                                                    58,374
                                                                    
                                                                    
                                                                    419,290
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    950,938
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    1,428,602Net
      income (loss) from operations
                                                                    
                                                                    
                                                                    (58,374
                                                                    )
                                                                    
                                                                    14,692,190
                                                                    
                                                                    
                                                                    (302,703
                                                                    )
                                                                    
                                                                    2,027,289
                                                                    
                                                                    
                                                                    (204,028
                                                                    )
                                                                    
                                                                    —
                                                                    
                                                                    
                                                                    16,154,373Interest
      Income
                                                                    
                                                                    
                                                                    619,160
                                                                    
                                                                    
                                                                    10,574
                                                                    
                                                                    
                                                                    (49,998
                                                                    )
      (2)
                                                                    
                                                                    21,346
                                                                    
                                                                    
                                                                    (52,913
                                                                    )
      (2)
                                                                    
                                                                    (119,469
                                                                    )
      (5)
                                                                    
                                                                    428,700Interest
      Expense
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    (80,916
                                                                    )
                                                                    
                                                                    (56,250
                                                                    )
      (3)
                                                                    
                                                                    (323,341
                                                                    )
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    (460,507
                                                                    )Other
      Income (Expense)
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    274,475
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    61
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    274,536Income
      before income taxes
                                                                    
                                                                    
                                                                    560,786
                                                                    
                                                                    
                                                                    14,896,323
                                                                    
                                                                    
                                                                    (408,951
                                                                    )
                                                                    
                                                                    1,725,355
                                                                    
                                                                    
                                                                    (256,941
                                                                    )
                                                                    
                                                                    (119,469
                                                                    )
                                                                    
                                                                    16,397,103Income
      taxes
                                                                    
                                                                    
                                                                    206,000
                                                                    
                                                                    
                                                                    —
                                                                    
                                                                    
                                                                    5,794,949
                                                                    (4)
                                                                    
                                                                    —
                                                                    
                                                                    
                                                                    611,706
                                                                    (4)
                                                                    
                                                                    (47,788
                                                                    )
      (6)
                                                                    
                                                                    6,564,867Net
      Income
                                                                    
                                                                    $
                                                                    354,786
                                                                    
                                                                    $
                                                                    14,896,323
                                                                    
                                                                    $
                                                                    (6,203,900
                                                                    )
                                                                    $
                                                                    1,725,355
                                                                    
                                                                    $
                                                                    (868,647
                                                                    )
                                                                    $
                                                                    (71,681
                                                                    )
                                                                    $
                                                                    9,832,235Weighted
      average shares outstanding
                                                                    
                                                                    
                                                                    10,750,000
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    2,964,763
                                                                    
                                                                    
                                                                    (1,622,456
                                                                    )
                                                                    
                                                                    12,092,307Weighted
      average shares- diluted
                                                                    
                                                                    
                                                                    13,193,218
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    2,964,763
                                                                    
                                                                    
                                                                    (1,622,456
                                                                    )
                                                                    
                                                                    14,535,525Net
      income per share- basic
                                                                    
                                                                    $
                                                                    0.03
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    $
                                                                    0.81Net
      income per share- diluted
                                                                    
                                                                    $
                                                                    0.03
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    
                                                                    $
                                                                    0.68




Notes
to pro forma income statement


(1)
                These
      adjustments represent the added depreciation created from the mark to
      market of the fixed assets of S.T. Pipeline and C.J. Hughes as required by
      purchase accounting(2)
                These
      adjustments reflect the interest income lost from the cash payments made
      to the shareholders of S.T. Pipeline and C.J. Hughes, etc. had the
      transaction been completed at the beginning of each period and therefore
      not earning interest.(3)
                This
      adjustment is to reflect the added interest cost that would have occurred
      relating to the notes issued to the Shareholders of S.T. Pipeline had the
      transaction been in place for the respective periods(4)
                S.T.
      Pipeline and C.J. Hughes were both Sub S corporations and therefore had no
      Federal income taxes. These entries are to reflect the estimated taxes for
      these companies had they been a part of Energy Services during the
      respective periods.(5)
                In
      accordance with the bylaws of Energy Services, shareholders had the right
      to vote against the transactions and request their shares be redeemed.
      These entries reflect the lost interest income from the purchase of those
      shares so redeemed.(6)
                These
      entries are to reflect the tax savings related to the interest income lost
      on the payments to redeem
shares.


6




2008
Actual compared to 2007 Pro Forma




Revenues.Revenues decreased by $29 million or 46.3% to $34 million for the three
months ended December 31, 2008. A primary factor in this decrease was a large
project at ST Pipeline in 2007 that did not reoccur in 2008. ST Pipeline had
revenues in the quarter ended December 31, 2007 of $37.5 million while the
quarter ended December 31, 2008 had revenues of $5.3 million. This decrease was
due primarily to the one large contract that was previously discussed. This
decrease more than offset some increases at the other companies for the
period.




Cost
of Revenues. The three months ended December 21, 2007 was one of the most
profitable periods in the predecessor Company’s history with a gross profit of
$18 million or 28%. The three months ended December 31, 2008 resulted in a $1.6
million gross loss. As a result of this loss, the cost of revenues was
significantly higher as a percentage of revenue than expected for the three
months ended December 31, 2008. Cost of revenues decreased by
22%.




Gross
Profit. For the three months ended December 31, 2008 we had a gross loss
$1.6 million. This was compared to a $18 million profit in the three month
period ended December 31, 2007. The loss was the result of two particular
projects at one of the operating subsidiaries which lost $3.2 million for the
quarter and those losses more than offset the normal performance at the other
subsidiaries. There was a combination of events that resulted in the losses on
these jobs. First, the Customer had several other projects that were supposed to
start in the quarter that they decided to delay. The pricing had been
established on these projects under the assumption of getting the added work.
When that did not occur, many costs that would have been spread over all the
jobs then had to be absorbed into these two existing jobs. Also, there were
unplanned work stoppages initiated by the customer for the thanksgiving and
Christmas holidays which resulted in added payroll costs of approximately
$450,000. These jobs have been completed and since this was an unusual
occurrence for portions of projects linked together get delayed and normally
when planning a project you know of scheduled work stoppages, we believe that
the results of these jobs is not indicative of future performance. We believe
that this was an unusual occurrence and not indicative of future
performance.




Selling
general and administrative expenses.Selling, general and administrative
increased by $300,000 (20.0%) to $1.7 million for the three months ended
December 31, 2008. This increase was partially due to establishing new offices
in Barboursville, WV. Increases in wages, supplies, etc. accounted for the
remaining increase.




Income
from Operations.Income from operations decreased $19 million or 120.5%
to a $3.0 million loss for the three months ended December 31, 2008. This is a
function of the previous categories.




Interest
Income.Interest income decrease $392,000 which was due to funds being
used for the acquisition of C.J. Hughes and S.T.
Pipeline.




Interest
ExpenseInterest Expense decreased by $44,000 to $417,000 for the three
months ended December 31, 2008. This decrease was primarily driven by the
reduction in the prime interest rate on which most of our financing is
based.




Other
Income.Other income decreased by $120,000 to $154,000 for the three
months ended December 31, 2008. This decrease was driven by the reduction of
rental of equipment to outside parties.




Net
Income (Loss).Net Income decreased by $12 million or 122.3% to a net
loss of $2.2 million for the three months ended December 31, 2008. The decrease
occurred due to the various changes as previously discussed, principally the
large decline in gross profit.




Comparison
of Financial Condition




The
Company had total assets at December 31, 2008 of $109.4 million. Some of the
primary components of the balance sheet were accounts receivable which totaled
$16.2 million down $22.3 million from the September 30, 2008 balances. This
large reduction was driven by the collections from two significant projects
which were completed during the current period. No significant projects have
been contracted, at this point in time, to replace that revenue stream. We are
currently bidding on at several significant projects and expect accounts
receivable to return to the $30 million range. Other major categories of assets
at December 31, 2008 included cash of $13.4 million and fixed assets of $32.3
million. Liabilities totaled $51.3 million down $22.1 million from the September
30, 2008 balances. This decrease was primarily due to reductions in accounts
payable and debt.  7




At
the end of 2007, the Company had $50.7 million of funds in a trust account being
held for the completion of acquisitions totaling at least 80% of the funds. That
balance grew to $51.5 million by August 15, 2008. Upon completion of the ST
Pipeline and CJ Hughes acquisitions on August 15, 2008, the Company disbursed
those funds with $33.2 million in cash going to the acquired companies’
shareholders, $9.7 million to redeem those Energy Services shareholders electing
redemption, $1.0 million to pay the underwriting deferred fee and the remaining
$7.5 million to the Company to be used for general corporate
purposes.




Stockholders’
Equity. Stockholders’ equity decreased from $60.3 million at September
30, 2008 to $58.1 million at December 31, 2008. This decrease was due to the net
loss of $2.2 million for the three months ended December 31,
2008.




Liquidity
and Capital Resources




Cash
Requirements




We
anticipate that our cash and cash equivalents on hand at September 30, 2008
which totaled $13.4 million along with our credit facilities available to us and
our anticipated future cash flows from operations will provide sufficient cash
to meet our operating needs. However, with the anticipated future energy
shortage nationwide and the increased demand for our services, we could be faced
with needing significant additional working capital. Also, current general
credit tightening resulting from the general banking and other economic
contraction that has occurred in the second half of 2008, has impaired the
availability of credit facilities for future operational needs. A prolonged
restriction in borrowing capacity may limit the growth ability of the
Company.




Sources
and uses of Cash




As
of December 31, 2008, we had $13.4 million in cash, working capital of $13.2
million and long term debt net of current maturities of $21.3
million.




Off-Balance
Sheet transactions




Due
to the nature of our industry, we often enter into certain off-balance sheet
arrangements in the ordinary course of business that result in risks not
directly reflected in our balance sheets. Though for the most part not material
in nature, some of these are:




Leases




Our
work often requires us to lease various facilities, equipment and vehicles.
These leases usually are short term in nature, one year or less, though when
warranted we may enter into longer term leases. By leasing equipment, vehicles
and facilities, we are able to reduce our capital outlay requirements for
equipment vehicles and facilities that we may only need for short periods of
time. The Company currently rents two parcels of real estate from
stockholders-directors of the company under long-term lease agreements. The one
agreement calls for monthly rental payments of $5,000 and extends through
January 1, 2012. The second agreement is for the Company’s headquarter offices
and is rented from a corporation in which two of the Company’s directors are
shareholders. The agreement began November 1, 2008 and runs through 2011 with
options to renew past that. It calls for a monthly rental of $7,500 per
month.




Letters
of Credit




Certain
of our customers or vendors may require letters of credit to secure payments
that the vendors are making on our behalf or to secure payments to
subcontractors, vendors, etc. on various customer projects. At December 31,
2008, the Company was contingently liable on an irrevocable Letter of Credit for
$950,000 to guarantee payments of insurance premiums to the group captive
insurance company through which the Company obtains its general liability
insurance.  8




Performance
Bonds




Some
customers, particularly new ones, or governmental agencies require us to post
bid bonds, performance bonds and payment bonds. These bonds are obtained through
insurance carriers and guarantee to the customer that we will perform under the
terms of a contract and that we will pay subcontractors and vendors. If we fail
to perform under a contract or to pay subcontractors and vendors, the customer
may demand that the insurer make payments or provide services under the bond. We
must reimburse the insurer for any expenses or outlays it is required to make.
Depending upon the size and conditions of a particular contract, we may be
required to post letters of credit or other collateral in favor of the insurer.
Posting of these letters or other collateral reduce our borrowing capabilities.
Historically, the Company has never had a payment made by an insurer under these
circumstances and does not anticipate any claims in the foreseeable future. At
December 31, 2008, we had $26.1 million in bonds issued by the insurer
outstanding.




Concentration
of Credit Risk




In
the ordinary course of business the company grants credit under normal payment
terms, generally without collateral, to our customers, which include natural gas
and oil companies, general contractors, and various commercial and industrial
customers located within the United States. Consequently, we are subject to
potential credit risk related to business and economic factors that would affect
these companies. However, we generally have certain statutory lien rights with
respect to services provided. Under certain circumstances such as foreclosure,
we may take title to the underlying assets in lieu of cash in settlement of
receivables. The Company had three customers that exceeded ten percent of
revenues for the year ended December 31, 2008. Those companies were Equitable
Resources, Columbia Gas and Markwest which accounted for 40% of
revenues.




Litigation




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




Related
Party Transactions




In
the normal course of business, we enter into transactions from time to time with
related parties. These transactions typically would not be material in nature
and would usually would relate to real estate, vehicle or equipment rentals.
However, from previous acquisition transactions the Company currently has $13
million of long-term debt to current directors, officers, and former owners of
an acquired company.




Inflation




Due
to relatively low levels of inflation during the three months ended December 31,
2007 and 2008, inflation did not have a significant effect on our
results.




Critical
Accounting Policies




The
discussion and analysis of the Company’s financial condition and results of
operations are based on our pro forma consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these consolidated financial statements
requires us to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosures of contingent assets and liabilities
known to exist at the date of the consolidated financial statements and reported
amounts of revenues and expenses during the reporting period. We evaluate our
estimates on an ongoing basis, based on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances.
There can be no assurance that actual results will not differ from those
estimates. Management believes the following accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.  9




Revenue
RecognitionWe recognize revenue when services are performed except when
work is being performed under a fixed price contract. Revenue from fixed price
contracts are recognized under the percentage of completion method, measured by
the percentage of costs incurred to date to total estimated costs for each
contract. Such contracts generally provide that the customer accept completion
of progress to date and compensate us for services rendered, measured typically
in terms of units installed, hours expended or some other measure of progress.
Contract costs typically include all direct material, labor and subcontract
costs and those indirect costs related to contract performance, such as indirect
labor, supplies, tools, repairs and depreciation. Provisions for the total
estimated losses on uncompleted contracts are made in the period in which such
losses are determined. Changes in job performance, job conditions, estimated
profitability and final contract settlements may result in revisions to costs
and income and their effects are recognized in the period in which the revisions
are determined.




Self
Insurance The Company is insured at one subsidiary for general liability
insurance through a captive insurance company. While the Company believes that
this arrangement has been very beneficial in reducing and stabilizing insurance
costs, the Company does have to maintain a letter of credit to guarantee
payments of premiums. Should the Captive experience severe losses over an
extended period, it could have a detrimental affect on the
Company.




Current
and Non Current Accounts Receivable and Provision for Doubtful AccountsThe Company provides an allowance for doubtful accounts when collection
of an account is considered doubtful. Inherent in the assessment of the
allowance for doubtful accounts are certain judgments and estimates relating to,
among others, our customer’s access to capital, our customer’s willingness or
ability to pay, general economic conditions and the ongoing relationship with
the customer. While most of our Customers are large well capitalized companies,
should they experience material changes in their revenues and cash flows or
incur other difficulties and not be able to pay the amounts owed, this could
cause reduced cash flows and losses in excess of our current reserves. At
December 31, 2008, the management review deemed that the allowance for doubtful
accounts was adequate to cover any anticipated losses.




Outlook




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




Recently
our customers have been experiencing high demand for their products,
particularly Natural Gas. Accordingly, we normally would expect to see projected
spending for our customers on their transmission and distribution systems
increasing dramatically over the next few years. However, with the current
uncertainty in the economy the demand for the customer’s project could wane and
also their ability to fund planned projects could be reduced. The Company’s
backlog at December 31, 2008 was $54 million and while adding additional
business projects appears likely, no assurances can be given that the Company
will be successful in bidding on projects that become available. Moreover, even
if the Company obtains contracts, there can be no guarantee that the projects
will go forward if the current economic instability continues.




If
the increased demand experienced in fiscal 2009 continues, we believe that the
Company will continue to have opportunities to continue to improve both revenue
volumes and the margins thereon. However, as noted above, if the current
economic conditions persist, growth could be limited.




If
growth continues, we will be required to make additional capital expenditures
for equipment to keep up with that need. Currently, it is anticipated that in
fiscal 2009, the Company’s needed capital expenditures will be between $2.0
million and $4.0 million dollars. However, if the customer demands continue to
grow, this number could change dramatically. Significantly higher capital
expenditure requirements could of course put a strain on the Company’s cash
flows and require additional borrowings.  10




ITEM
6. Exhibits


31.1
            
            Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities
      Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of
      the Sarbanes-Oxley Act of 200231.2
            
            Certification
      of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities
      Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of
      the Sarbanes-Oxley Act of 200232
            
            Certification
      of Chief Executive Officer and Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002




11




SIGNATURES




Pursuant
to the requirements of Section 13 of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


ENERGY
      SERVICES OF AMERICA CORPORATIONDate:
      May 6, 2009
              By:
              /s/
      Marshall T. ReynoldsMarshall
      T. ReynoldsChairman
      and Chief Executive OfficerDate:
      May 6, 2009
              By:
              /s/
      Edsel R. BurnsEdsel
      R. BurnsPresident(Principal
      Executive Officer)Date:
      May 6, 2009
              By:
              /s/
      Larry A. BlountLarry
      A. BlountChief
      Financial Officer(Principal Financial and Accounting
Officer)