ensv20220331b

ensv20220331b_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number 001-36335

ENSERVCO CORPORATION

(Exact name of registrant as specified in its charter)

Delaware		84-0811316
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

14133 Country Road 9 1/2 Longmont, CO		80504
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number: (303) 333-3678

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of exchange on which registered
Common stock		ENSV		NYSE American

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 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 17, 2022 there were 11,491,623 shares of common stock, par value $0.005 per share, issued and outstanding.

Table of Contents

TABLE OF CONTENTS

	Page
Part I – Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets	4
Condensed Consolidated Statements of Operations	5
Condensed Consolidated Statements of Stockholders' Equity	6
Condensed Consolidated Statements of Cash Flows	7
Notes to the Condensed Consolidated Financial Statements	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. Quantitative and Qualitative Disclosures about Market Risk	40
Item 4. Controls and Procedures	40

Part II
Item 1. Legal Proceedings	41
Item 1A. Risk Factors	41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3. Defaults Upon Senior Securities	42
Item 4. Mine Safety Disclosures	42
Item 5. Other Information	42
Item 6. Exhibits	43

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENSERVCO CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

	March 31, 2022			December 31, 2021
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	990		$	149
Accounts receivable, net		5,666			2,845
Prepaid expenses and other current assets		1,258			2,185
Inventories		405			346
Assets held for sale		68			68
Total current assets		8,387			5,593

Property and equipment, net		15,128			16,173
Goodwill		546			546
Intangible assets, net		345			399
Right-of-use asset - finance, net		31			41
Right-of-use asset - operating, net		1,862			2,060
Other assets		328			336

TOTAL ASSETS	$	26,627		$	25,148

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	5,050		$	2,857
Senior revolving credit facility, related party (including future interest payable of $0 and $38, respectively - see Note 5)		-			8,698
Utica facility (Note 5)		919			-
LSQ facility (Note 5)		2,400			-
Subordinated debt, related party (Note 2 and Note 5)		-			211
Lease liability - finance, current		13			20
Lease liability - operating, current		638			688
Current portion of long-term debt		59			58
Other current liabilities		1,000			-
Total current liabilities		10,079			12,532

Non-Current Liabilities:
Senior revolving credit facility, related party		-			5,404
Utica facility, less current portion (Note 5)		5,083			-
March 2022 convertible note, related party (Note 2 and Note 5)		1,200			-
Long-term debt, less current portion (Note 5)		39			54
Lease liability - finance, less current portion		19			23
Lease liability - operating, less current portion		1,348			1,496
Deferred tax liabilities		273			273
Other non-current liabilities		21			24
Total non-current liabilities		7,983			7,274

TOTAL LIABILITIES		18,062			19,806

Commitments and Contingencies (Note 7)

Stockholders' Equity:
Preferred stock, $0.005 par value, 10,000,000 shares authorized, no shares issued or outstanding		-			-
Common stock, $0.005 par value, 100,000,000 shares authorized; 11,509,531 and 11,439,191 shares issued as of March 31, 2022 and December 31, 2021, respectively; 6,907 shares of treasury stock as of March 31, 2022 and December 31, 2021, respectively; and 11,502,624 and 11,432,284 shares outstanding as of March 31, 2022 and December 31, 2021, respectively		57			57
Additional paid-in capital		40,949			40,866
Accumulated deficit		(32,441	)		(35,581	)
Total stockholders' equity		8,565			5,342

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	26,627		$	25,148

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

ENSERVCO CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	For the Three Months Ended
	March 31,
	2022			2021
Revenues:
Production services	$	2,747		$	1,844
Completion and other services		5,836			3,299
Total revenues		8,583			5,143

Expenses:
Production services		2,584			1,967
Completion and other services		4,710			3,142
Sales, general, and administrative expenses		1,111			1,005
Loss on disposal of assets		35			51
Depreciation and amortization		1,143			1,336
Total operating expenses		9,583			7,501

Loss from operations		(1,000	)		(2,358	)

Other (expense) income:
Interest expense		(172	)		(33	)
Gain on debt extinguishment (Note 5)		4,277			-
Other income (expense)		35			(78	)
Total other income (expense)		4,140			(111	)

Income (loss) from continuing operations before taxes		3,140			(2,469	)
Deferred income tax expense		-			(1,425	)
Income (loss) from continuing operations		3,140			(3,894	)
Loss from discontinued operations		-			(8	)
Net income (loss)	$	3,140		$	(3,902	)


Income (loss) from continuing operations per common share - basic	$	0.27		$	(0.42	)
Loss from discontinued operations per common share - basic		-			-
Net income (loss) per share - basic	$	0.27		$	(0.42	)


Income (loss) from continuing operations per common share - diluted	$	0.27		$	(0.42	)
Loss from discontinued operations per common share - diluted		-			-
Net income (loss) per share - diluted	$	0.27		$	(0.42	)


Basic weighted average number of common shares outstanding		11,452			9,187
Add: Dilutive shares		135			-
Diluted weighted average number of common shares outstanding		11,587			9,187

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

ENSERVCO CORPORATION AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands)

(Unaudited)

	Common Shares		Common Stock		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Equity
Balance at January 1, 2021		6,301	$	32	$	30,052	$	(27,529	)	$	2,555
Stock-based compensation		-		-		24		-			24
Shares issued in offering, net of issuance costs		4,200		21		8,824		-			8,845
Shares and warrant issued to Cross River Partners, L.P. in subordinated debt and accrued interest conversion, net of discount		602		3		1,550		-			1,553
Restricted share issuances		330		1		310		-			311
Net loss		-		-		-		(3,902	)		(3,902	)
Balance at March 31, 2021		11,433	$	57	$	40,760		(31,431	)	$	9,386

Common

Shares

Common

Stock

Additional

Paid-in

Capital

Accumulated

Deficit

Total

Stockholders’

Equity

Balance at January 1, 2022

SEC Form 10-Q filed by Enservco Corporation