Business Context and Reporting Period
This Form 8-K Current Report was filed by Energy Services of America Corporation (ESOA) on April 6, 2022. The filing discloses the entry into a material definitive agreement to acquire substantially all assets of Tri-State Paving & Sealcoat, LLC through a newly formed wholly owned subsidiary, Tri-State Paving Acquisition Company.
Key Financial Metrics and Transaction Details
The filing details a specific acquisition transaction rather than periodic financial performance metrics such as revenue or cash flow. The total consideration for the acquisition is structured as follows:
- Cash: $7.5 million
- Promissory Note: $1.0 million (4-year term, 3.5% interest, $250,000 annual principal installments)
- Common Stock: $1.0 million in ESOA stock (52% to Un Kyung Corns, 48% to David Corns)
The filing does not provide current revenue, profit, margin, or liquidity figures for the Company.
Material Changes and Transaction Structure
The primary material change is the pending acquisition of Tri-State Paving, expected to close on April 29, 2022. Key structural elements include:
- Management Continuity: David Corns will serve as President of the new subsidiary under a 36-month employment agreement and a 60-month non-competition agreement.
- Stock Price Protection: If the ESOA share price is below $1.50 per share 180 days after issuance, the Company must pay the sellers the difference between $1.50 and the market value.
- Real Estate: Sellers have an option to purchase the leased office property in Hurricane, WV. Upon acquisition, a 3-year lease at $7,000/month will commence. The Buyer has an option to purchase the property for $950,000, with a $1,000 monthly credit toward the purchase price for each month of occupancy.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, revenue outlook, or management commentary regarding future financial performance. The transaction is subject to customary closing conditions. A specific financial contingency exists regarding the stock price floor of $1.50 per share, which could result in additional cash outflows if the market price falls below this threshold within the specified period.
Investor Verification Checklist
- Verify the closing date of April 29, 2022, and confirm if all customary conditions were met.
- Monitor the ESOA stock price 180 days post-issuance to assess potential liability for the $1.50 price floor provision.
- Review the full Asset Purchase Agreement (Exhibit 2.1) for detailed representations, warranties, and indemnification clauses.
- Confirm the execution of the office property purchase and subsequent lease agreement between the Sellers and the Buyer.
- Assess the impact of the $7.5 million cash outlay and $1.0 million note on the Company's current liquidity position.