ensv20170731

10-Q 1 ensv20210331_10q.htm FORM 10-Q ensv20170731_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, 2021

☐ 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

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 Enservco 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 ☒

Indicate the number of shares outstanding of each of the Issuer's classes of common stock as of the latest practicable date.

Class	Outstanding at May 10, 2021
Common stock, $.005 par value	11,432,726

	Page

Part I – Financial Information

Item 1. Financial Statements

Condensed Consolidated Balance Sheets	2

Condensed Consolidated Statements of Operations	3

Condensed Consolidated Statements of Stockholders' Equity	4

Condensed Consolidated Statements of Cash Flows	5

Notes to the Condensed Consolidated Financial Statements	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3. Quantitative and Qualitative Disclosures about Market Risk	45

Item 4. Controls and Procedures	45


Part II

Item 1. Legal Proceedings	46

Item 1A. Risk Factors	46

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	47

Item 3. Defaults Upon Senior Securities	47

Item 4. Mine Safety Disclosures	47

Item 5. Other Information	47

Item 6. Exhibits	48

	March 31,			December 31,
ASSETS	2021			2020
Current Assets
Cash and cash equivalents	$	3,700		$	1,467
Accounts receivable, net		3,172			1,733
Prepaid expenses and other current assets		971			858
Inventories		334			295
Assets held for sale		527			527
Total current assets		8,704			4,880

Property and equipment, net		19,035			20,317
Goodwill		546			546
Intangible assets, net		563			617
Right-of-use asset - finance, net		110			129
Right-of-use asset - operating, net		2,708			2,918
Other assets		421			423
Non-current assets of discontinued operations		347			353

TOTAL ASSETS	$	32,434		$	30,183

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities	$	1,315		$	1,931
Senior revolving credit facility, related party (including future interest payable of $735 and $892, respectively - see Note 6)		1,318			1,593
Lease liability - finance, current		66			65
Lease liability - operating, current		847			854
Current portion of long-term debt		89			100
Current liabilities of discontinued operations		33			31
Total current liabilities		3,668			4,574

Long-Term Liabilities
Senior revolving credit facility, related party (including future interest payable of $433 and $485, respectively - see Note 6)		13,850			17,485
Subordinated debt, related party (Note 2)		-			1,180
Long-term debt, less current portion		2,038			2,052
Lease liability - finance, less current portion		38			55
Lease liability - operating, less current portion		1,986			2,185
Other liabilities		43			88
Long-term liabilities of discontinued operations		-			9
Total long-term liabilities		17,955			23,054
Total liabilities		21,623			27,628

Commitments and Contingencies (Note 8)

Stockholders' Equity
Preferred stock, $.005 par value, 10,000,000 shares authorized, no shares issued or outstanding		-			-
Common stock. $.005 par value, 100,000,000 shares authorized; 11,439,630 and 6,307,868 shares issued as of March 31, 2021 and December 31, 2020, respectively; 6,907 shares of treasury stock as of March 31, 2021 and December 31, 2020, respectively; and 11,432,723 and 6,300,961 shares outstanding as of March 31, 2021 and December 31, 2020, respectively		57			32
Additional paid-in capital		40,456			30,052
Accumulated deficit		(29,702	)		(27,529	)
Total stockholders' equity		10,811			2,555

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	32,434		$	30,183

	For the Three Months Ended
	March 31,
	2021			2020

Revenues
Production services	$	1,844		$	3,202
Completion and other services		3,299			6,184
Total revenues		5,143			9,386

Expenses
Production services		1,967			3,494
Completion and other services		3,142			4,971
Sales, general, and administrative expenses		1,005			1,762
Loss on disposal of assets		51			15
Depreciation and amortization		1,336			1,396
Total operating expenses		7,501			11,638

Loss from Operations		(2,358	)		(2,252	)

Other (expense) income
Interest expense		(33	)		(641	)
Other income		226			20
Total other income (expense)		193			(621	)

Loss from continuing operations before taxes		(2,165	)		(2,873	)
Income tax expense		-			-
Loss from continuing operations		(2,165	)		(2,873	)
(Loss) income from discontinued operations (Note 5)		(8	)		36
Net loss	$	(2,173	)	$	(2,837	)


Loss from continuing operations per common share - basic and diluted	$	(0.24	)	$	(0.78	)
(Loss) income from discontinued operations per common share - basic and diluted		-			0.01
Net loss per share - basic and diluted	$	(0.24	)	$	(0.77	)

Weighted average number of common shares outstanding - basic and diluted		9,187			3,701

	Common Shares			Common Stock		Additional Paid-in Capital		Accumulated Deficit			Total Stockholders’ Equity (Deficit)

Balance at January 1, 2020		3,703		$	19	$	22,325	$	(25,020	)	$	(2,676	)
Stock-based compensation		-			-		39		-			39
Restricted share cancellation		(2	)		-		-		-			-
Net loss		-			-		-		(2,837	)		(2,837	)
Balance at March 31, 2020		3,701		$	19	$	22,364	$	(2,837	)	$	(5,474	)

Name	State of Formation	Ownership	Business
Heat Waves Hot Oil Service LLC	Colorado	100% by Enservco	Oil and natural gas well services, including logistics and stimulation.

Adler Hot Oil Service, LLC	Delaware	100% by Enservco	Operations integrated into Heat Waves during 2019.

Heat Waves Water Management LLC	Colorado	100% by Enservco	Discontinued operations in 2019

Dillco Fluid Service, Inc	Kansas	100% by Enservco	Discontinued operation in 2018

HE Services LLC	Nevada	100% by Heat Waves	No active business operations. Owned construction equipment used by Heat Waves. HE Services LLC was dissolved on December 23, 2020.

	March 31, 2021			December 31, 2020
Customer relationships	$	626		$	626
Patents and trademarks		441			441
Total intangible assets		1,067			1,067
Accumulated amortization		(504	)		(450	)
Net carrying value	$	563		$	617

	2022		2023		2024		2025		2026
Customer relationships	$	125	$	125	$	73	$	-	$	-
Patents and trademarks		93		93		54		-		-
Total intangible asset amortization expense	$	218	$	218	$	127	$	-	$	-

	Three Months Ended March 31,
	2021			2020

Revenue	$	-		$	-
Cost of sales		(1	)		-
Sales, general, and administrative expenses		-			-
Depreciation and amortization		(6	)		(6	)
Other expense items that are not major		(1	)		(12	)
Pretax loss of discontinued operations related to major classes of pretax profit		(8	)		(18	)
Gain on disposal		-			54
Total (loss) income on discontinued operations that is presented in the Statements of Operations	$	(8	)	$	36

Twelve Months Ending March 31,
2022		824
2023		16,432
2024		39
Thereafter		-
Total	$	17,295

Twelve Months Ending March 31,	Operating Leases			Finance Leases
2022	$	948		$	99
2023		709			20
2024		645			14
2025		399			6
2026		356			-
Thereafter		90			-
Total future lease commitments		3,147			139
Impact of discounting		(314	)		(35	)
Discounted value of lease obligations	$	2,833		$	104

	March 31,				December 31,
	2021				2020

Senior Revolving Credit Facility with related party. All future interest through October 15, 2021 accrued to loan pursuant to the Fifth Amendment. Interest at 8.25%, 5.25% is paid monthly while 3% is accrued and paid upon maturity. Matures October 15, 2022.	$	15,168		$		19,078

Paycheck Protection Loan. Interest is at 1% with payments deferred until October 10, 2020. Matures April 10, 2022.		1,940				1,940

Subordinated Promissory Note with related party. Interest is at 10% and is paid quarterly. Matures June 28, 2022. See Note 2 - Summary of Significant Accounting Policies and Recent Developments for discussion of conversion of debt balance.		-				1,250

Real Estate Loan for a facility in North Dakota, interest at 5.75%, and monthly principal and interest payment of $5,255 until October 3, 2023. Collateralized by land and property purchased with the loan.		153				167

Vehicle loans for three pickups, interest at 8.59% monthly principal and interest payments of $3,966, matures in August 2021.		20				31

Note payable to the seller of Heat Waves. The note was garnished by the Internal Revenue Service (“IRS”) in 2009 and is due on demand; paid in annual installments of $36,000 per agreement with the IRS		14				14
Total		17,295				22,480
Less debt discount		-				(70	)
Less current portion		(1,407	)			(1,693	)
Long-term debt, net of debt discount and current portion	$	15,888			$	20,717

	Three Month Ended March 31,
	2021			2020
Operating
Weighted-average lease term (years)		3.90			4.35
Weighted-average discount rate		6.08	%		6.08	%
Finance
Weighted-average lease term (years)		1.91			1.91
Weighted-average discount rate		5.92	%		6.10	%

					Weighted
			Weighted		Average
			Average		Remaining
			Exercise		Contractual
Warrants	Shares		Price		Life (Years)

Outstanding at December 31, 2020		1,043,667	$	3.73		4.7
Issued		150,418		2.51		4.9
Outstanding at March 31, 2021		1,194,085	$	3.58		4.5

Exercisable at March 31, 2021		43,667	$	3.34		3.5

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)

Outstanding at December 31, 2020		11,569		$	5.87		0.53
Forfeited or Expired		(6,667	)		5.55		-
Outstanding at March 31, 2021		4,902		$	6.31		0.94

Vested at March 31, 2021		4,902		$	6.31		0.94
Exercisable at March 31, 2021		4,902		$	6.31		0.94

	Number of Shares			Weighted-Average Grant- Date Fair Value

Restricted shares at December 31, 2020		24,393		$	7.32
Granted		165,000			1.05
Vested		(3,667	)		7.05
Forfeited		(1,223	)		9.99
Restricted shares at March 31, 2021		184,503		$	1.70

	Production Services			Completion and Other Services		Unallocated		Total
Three Months Ended March 31, 2021:
Revenues	$	1,844		$	3,299	$	-	$	5,143
Cost of Revenue		1,967			3,142		-		5,109
Segment (Loss) Profit	$	(123	)	$	157	$	-	$	34

Depreciation and Amortization	$	528		$	712	$	96	$	1,336

Capital Expenditures	$	19		$	26	$	-	$	45

Identifiable assets ⁽¹⁾	$	10,842		$	14,636	$	829	$	26,307

Three Months Ended March 31, 2020:
Revenues	$	3,202		$	6,184	$	-	$	9,386
Cost of Revenue		3,494			4,971			$	8,465
Segment (Loss) Profit	$	(292	)	$	1,213	$		$	921

Depreciation and Amortization	$	671		$	647	$	78	$	1,396

Capital Expenditures	$	83		$	81	$	-	$	164

Identifiable assets ⁽¹⁾	$	17,662		$	17,033	$	1,278	$	35,973

	●	The impact of general economic conditions on the demand for oil and natural gas and the availability of capital which may impact our ability to perform services for our customers;
	●	The geographical diversity of our operations which adds significantly to our costs of doing business;
	●	Our history of losses and working capital deficits which, at times, have been significant;
	●	Weather and environmental conditions, including the potential of abnormally warm winters in our areas of operations that adversely impact demand for our services;
	●	Our ability to retain key members of our senior management and key technical employees;

SEC Form 10-Q filed by ENSERVCO Corporation