UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

Date of Report: January 6, 2020

(Date of earliest event reported)

 

 

 

Enservco Corporation

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

001-36335

 

84-0811316

(State or other jurisdiction of incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

999 18th Street, Suite 1925N

Denver, Colorado 80202

(Address of principal executive offices) (Zip Code)

 

(303) 333-3678

(Registrant’s telephone number, including area code)

 

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.005 par value per share

ENSV

NYSE

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company   ☐

If an emerging growth company, indicate 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. ☐

 

 
 

 

 

Item 2.02 Results of Operations and Financial Condition.

 

On January 10, 2020, Enservco Corporation (the “Company”) issued a press release providing updates regarding its operations and other matters.  A copy of the press release is furnished herewith as Exhibit 99.1.

 

The information in this Current Report on Form 8-K furnished pursuant to Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section, and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement.

 

On January 6, 2020, the Company received a notice (the “Default Notice”) from East West Bank regarding events of default of the Company with respect to the Company's existing Loan and Security Agreement (the “2017 Credit Agreement”) by and between the Company and East West Bank, a California banking corporation (“East West Bank”). As a result of the events of default, East West Bank may accelerate the $34.0 million outstanding loan balance under the 2017 Credit Agreement to be immediately due and payable. As of the date of this report, East West Bank has not accelerated the outstanding loan balance amount but it may do so in the future.

 

The Default Notice indicates that the Company is in default under the 2017 Credit Agreement as a result of its:

 

 

●

failure to immediately repay a loan overadvance that occurred on October 10, 2019 that has continued through January 6, 2020;

 

 

●

failure to maintain a minimum liquidity of not less than $1,500,000 for the months ended October 31, 2019 and November 30, 2019; and

 

 

●

failure to maintain a minimum fixed charge coverage ratio of not less than 1:10 to 1:00 for the months ended October 31, 2019 and November 30, 2019.

 

The Default Notice indicated that although East West Bank was not as of January 6, 2020, exercising its rights and remedies available as a result of the events of default, it specifically did not waive its rights and remedies resulting from the the events of default and it reserves all other available rights and remedies under the Credit Agreement, certain other related documents and applicable law.

 

The Company has commenced discussions with East West Bank concerning a forbearance agreement or waiver of the event of default; however, there can be no assurance that the Company and East West Bank will reach any agreement (either oral or written) regarding a forbearance or waiver of any events of default.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated January 10, 2020

 

 

 

 

 
 

 

SIGNATURE

 

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

 

 

 

 

                                                      ENSERVCO CORPORATION

     

Date:  January 10, 2020

By:

/s/ Ian Dickinson
   

Ian Dickinson

   

Chief Executive Officer

 

 

 

 

 
 

 

EXHIBIT INDEX

 

 

Exhibit No.

 

Description

 

 

 

99.1

 

Press Release dated January 10, 2020

 

 

EXHIBIT 99.1 

 

 

ENSERVCO Corporation Updates Investors on 2019 Fourth Quarter and Full Year Financial Expectations

 

DENVER, CO – January 10, 2020 – Enservco Corporation (NYSE American: ENSV), a diversified national provider of specialized well-site services to the domestic onshore conventional and unconventional oil and gas industries, today announced it expects 2019 fourth quarter revenue to be between $8.0 million and $8.1 million as compared to $13.3 million in the fourth quarter last year.  Full-year 2019 revenue is expected to be between $43.0 million and $43.1 million compared to $42.8 million in 2018. These preliminary revenue estimates have been adjusted to reflect the discontinuation of water transfer operations in the fourth quarter of 2019.

 

Ian Dickinson, President and CEO, said the results reflect a sharper than anticipated decline in domestic oil and gas well completion activity and resulting pricing pressure in the fourth quarter.  He added that it is too early in the year-end close process to provide adjusted EBITDA information.

 

“The decline in drilling and completion activity accelerated in the fourth quarter and combined with significant pricing pressure to result in lower than expected revenue in Q4 and 2019,” said Dickinson.  “As a result, the market share gains we achieved during 2019 did not translate into improved financial results.  On a positive note, we have seen an uptick in customer activity in the first 10 days of January and, although it is still early, we are hopeful that we will achieve a meaningful increase in sequential quarter revenue.  Enservco provides more than 300 domestic oil and gas producers, including some of the world’s largest, with mission critical services.  We are the nation’s largest provider of frac water heating and we provide a variety of complementary services for drilling and completions as well as maintenance and support.”

In other Company news, Enservco has submitted a business plan to the NYSE American exchange that outlines the Company’s intention to regain compliance with listing standards.  In addition, as previously announced in the Company’s third quarter investor update, in October 2019 Enservco incurred $1.2 million in over-advances above its $29.7 million borrowing base availability on its bank line of credit.  The over-advances related to the Company ramping up to fulfill customer demand for the 2019-20 heating season.  On January 6, 2020, the bank provided Enservco with a notice of events of default and reservation of rights pertaining to the Company not having: 1) maintained minimum liquidity of $1.5 million for the months of October and November 2019; 2) maintained a minimum fixed charge coverage ratio of 1.1 to 1.0 for the months of October and November 2019.  The bank has elected not to exercise, and has not waived, its right to immediate payment of this over-advance and Enservco continues to work with the bank to resolve this issue.

About ENSERVCO

Through its various operating subsidiaries, ENSERVCO provides a wide range of oilfield services, including hot oiling, acidizing, frac water heating, water transfer, and water hauling.  The Company has a broad geographic footprint covering seven major domestic oil and gas basins and serves customers in Colorado, Montana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Ohio, Texas, Wyoming and West Virginia. Additional information is available at www.enservco.com

 

Cautionary Note Regarding Forward-Looking Statements

This news release contains information that is "forward-looking" in that it describes events and conditions ENSERVCO reasonably expects to occur in the future. Expectations for the future performance of ENSERVCO are dependent upon a number of factors, and there can be no assurance that ENSERVCO will achieve the results as contemplated herein. Certain statements contained in this release using the terms "may," "expects to," and other terms denoting future possibilities, are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks, which are beyond ENSERVCO's ability to predict, or control and which may cause actual results to differ materially from the projections or estimates contained herein. Among these risks are those set forth in ENSERVCO’s annual report on Form 10-K for the year ended December 31, 2018, and subsequently filed documents with the SEC.  Forward looking statements in this news release that are subject to risk include potential for drilling and completions activity levels and fleet utilization to continue increasing.  It is important that each person reviewing this release understand the significant risks attendant to the operations of ENSERVCO.  ENSERVCO disclaims any obligation to update any forward-looking statement made herein.

 

Contact:

 

Jay Pfeiffer

Pfeiffer High Investor Relations, Inc.

Direct: 303-880-9000

Email: jay@pfeifferhigh.com