Enservco Corp (Form: 8-K, Received: 07/08/2022 06:01:51)

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 July 7, 2022

(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.)

14133 County Road 9½

Longmont, Colorado 80504

(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, $0.005 par value	ENSV	NYSE American

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. ☐

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 8.01 Other Events

The Company issued a press release on July 7, 2022 reporting the Company’s 2021 Fourth Quarter and full year financial results.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

A press release is attached hereto as Exhibit 99.1, and is incorporated herein by reference.

Exhibit No.	Description/Exhibit
99.1	Press Release dated July 7, 2022
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on July 7, 2022.

	Enservco Corporation



	By:	/s/ Richard A. Murphy
		Richard A. Murphy, Executive Chair and CEO

	December 31,
	2021			2020
ASSETS
Current Assets:
Cash and cash equivalents	$	149		$	1,467
Accounts receivable, net		2,845			1,733
Prepaid expenses and other current assets		2,185			858
Inventories		346			295
Assets for held for sale		68			527
Total current assets		5,593			4,880

Property and equipment, net		16,173			20,317
Goodwill		546			546
Intangible assets, net		399			617
Right-of-use asset - finance, net		41			129
Right-of-use asset - operating, net		2,060			2,918
Other assets		336			423
Non-current assets of discontinued operations		-			353

TOTAL ASSETS	$	25,148		$	30,183

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	2,857		$	1,931
Senior revolving credit facility, related party (including future interest payable of $38 and $892, respectively)		8,698			1,593
Subordinated debt, related party		211			-
Lease liability - finance, current		20			65
Lease liability - operating, current		688			854
Current portion of long-term debt		58			100
Current liabilities of discontinued operations		-			31
Total current liabilities		12,532			4,574

Non-Current Liabilities:
Senior revolving credit facility, related party (including future interest payable of $0 and $485, respectively)		5,404			17,485
Subordinated debt, related party		-			1,180
Long-term debt, less current portion		54			2,052
Lease liability - finance, less current portion		23			55
Lease liability - operating, less current portion		1,496			2,185
Deferred tax liabilities		273			-
Other liabilities		24			88
Long-term liabilities of discontinued operations		-			9
Total non-current liabilities		7,274			23,054

TOTAL LIABILITIES		19,806			27,628

Commitments and Contingencies

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; 11,439,191 and 6,307,868 shares issued as of December 31, 2021 and 2020, respectively; 6,907 shares of treasury stock as of December 30, 2021 and 2020; and 11,432,284 and 6,300,961 shares outstanding as of December 30, 2021 and 2020, respectively		57			32
Additional paid-in capital		40,866			30,052
Accumulated deficit		(35,581	)		(27,529	)
Total stockholders' equity		5,342			2,555

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	25,148		$	30,183

	For the Three Months Ended December 31,						For the Year Ended December 31,
	2021			2020			2021			2020

Revenues:
Production services	$	2,456		$	1,766		$	9,012		$	7,714
Completion and other services		1,624			626			6,325			7,969
Total revenues		4,080			2,392			15,337			15,683

Expenses:
Production services		2,932			1,755			9,734			8,410
Completion and other services		1,925			1,188			7,605			8,801
Sales, general and administrative expenses		1,281			944			4,185			5,002
Severance and transition costs		7			6			7			145
(Gain) loss on disposal of equipment		(194	)		(12	)		(124	)		47
Impairment loss		128			733			128			733
Depreciation and amortization		1,240			1,305			5,215			5,282
Total operating expenses		7,319			5,919			26,750			28,420

Loss from operations		(3,239	)		(3,527	)		(11,413	)		(12,737	)

Other income (expense):
Interest expense		(7	)		(30	)		(57	)		(1,695	)
Gain on restructuring of senior revolving credit facility		-			-			-			11,916
Other income		31			1			3,699			126
Total other income (expense)		24			(29	)		3,642			10,347

Loss from continuing operations before taxes		(3,215	)		(3,556	)		(7,771	)		(2,390	)
Income tax benefit (expense)		129			3			(273	)		(12	)
Loss from continuing operations		(3,086	)		(3,553	)		(8,044	)		(2,402	)
Loss from discontinued operations		-			(167	)		(8	)		(107	)
Net loss	$	(3,086	)	$	(3,720	)	$	(8,052	)	$	(2,509	)


Loss from continuing operations per common share - basic and diluted	$	(0.27	)	$	(0.66	)	$	(0.74	)	$	(0.57	)
Loss from discontinued operations per common share - basic and diluted		-			(0.03	)		-			(0.03	)
Net loss per share - basic and diluted	$	(0.27	)	$	(0.69	)	$	(0.74	)	$	(0.60	)

Weighted average number of common shares outstanding – basic and diluted		11,432			5,385			10,879			4,174

	For the Year Ended December 31,
	2021			2020
OPERATING ACTIVITIES:
Net loss	$	(8,052	)	$	(2,509	)
Net loss from discontinued operations		(8	)		(107	)
Net loss from continuing operations		(8,044	)		(2,402	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		5,215			5,282
(Gain) loss on disposal of property and equipment		(124	)		47
Impairment loss		128			733
Board compensation issued in equity		311			-
Fair value of warrant issued upon conversion of subordinated debt to equity		304			-
Stock-based compensation		130			392
Amortization of debt issuance costs and discount		9			131
Income tax expense		273			-
Gain on restructuring of senior revolving credit facility		-			(11,916	)
Gain on forgiveness of PPP loan		(1,964	)		-
Gain on early termination of finance leases		-			(3	)
Interest paid-in-kind on line of credit		-			326
Bad debt expense		268			140
Changes in operating assets and liabilities:
Accounts receivable		(1,380	)		4,551
Inventories		(51	)		103
Prepaid expense and other current assets		(1,117	)		157
Income taxes receivable		-			43
Amortization of operating lease assets		858			829
Other assets		320			1
Accounts payable and accrued liabilities		1,005			(2,272	)
Operating lease liabilities		(855	)		(771	)
Other liabilities		(64	)		54
Net cash used in operating activities - continuing operations		(4,778	)		(4,575	)
Net cash provided by operating activities - discontinued operations		4			132
Net cash used in operating activities		(4,774	)		(4,443	)

INVESTING ACTIVITIES:
Purchases of property and equipment		(593	)		(361	)
Proceeds from insurance claims		-			294
Proceeds from disposals of property and equipment		393			329
Net cash (used in) provided by investing activities - continuing operations		(200	)		262
Net cash provided by investing activities - discontinued operations		-			765
Net cash (used in) provided by investing activities		(200	)		1,027

FINANCING ACTIVITIES:
Gross proceeds from stock issuance		9,660			3,597
Stock issuance costs and registration fees		(815	)		(296	)
Term loan repayments		(3,505	)		-
Net line of credit repayments		(701	)		(795	)
Proceeds from PPP loan		-			1,940
TDR accrued future interest payments		(770	)		-
Repayment of long-term debt		(100	)		(134	)
Payments of finance leases		(111	)		(159	)
Proceeds from sale of finance lease assets		-			67
Net cash provided by financing activities - continuing operations		3,658			4,220
Net cash used in financing activities - discontinued operations		(2	)		-
Net cash provided by financing activities		3,656			4,220

Net (Decrease) Increase in Cash and Cash Equivalents		(1,318	)		804

Cash and Cash Equivalents, beginning of period		1,467			663

Cash and Cash Equivalents, end of period	$	149		$	1,467

Supplemental Cash Flow Information:
Cash paid for interest	$	822	$	1,414
Cash paid for taxes		-		2
Supplemental Disclosure of Non-cash Investing and Financing Activities:
Non-cash reduction of debt in connection with restructuring of senior revolving credit facility	$	-	$	16,000
Non-cash issuance of Company common stock and warrants in connection with restructuring of senior revolving credit facility		-		2,532
Non-cash conversion of subordinated debt and accrued interest to Company common stock		1,312		1,515
Non-cash conversion of accrued interest to senior revolving credit facility		-		326
Non-cash conversion of unamortized subordinated debt discount		61		-
Deferred loan costs paid directly by related party in lieu of subordinated note payable		210		-

	For the Three Months Ended December 31,						For the Year Ended December 31,
	2021			2020			2021			2020

Net loss	$	(3,086	)	$	(3,720	)	$	(8,052	)	$	(2,509	)
Add back (deduct):
Interest expense (including discontinued operations)		6			31			57			1,698
Income tax (benefit) expense		(129	)		(3	)		273			12
Depreciation and amortization (including discontinued operations)		1,241			1,312			5,222			5,308
EBITDA*		(1,968	)		(2,380	)		(2,500	)		4,509
Add back (deduct):
Stock-based compensation		60			15			130			392
Severance and transition costs		-			6			7			145
Impairment loss		128			733			128			733
(Gain) loss on sale and disposal of equipment (including discontinued operations)		(194	)		149			(124	)		115
Gain on debt restructuring		-			-			-			(11,916	)
Adler consolidation		-			55			-			55
Other (income) expense		(31	)		(36	)		(3,699	)		246
EBITDA related to discontinued operations		-			-			1			11
Adjusted EBITDA	$	(2,005	)	$	(1,458	)	$	(6,057	)	$	(5,710	)

Use of Non-GAAP Financial Measures: Non-GAAP results are presented only as a supplement to the financial statements and for use within management’s discussion and analysis based on U.S. generally accepted accounting principles (GAAP). The non-GAAP financial information is provided to enhance the reader's understanding of the Company’s financial performance, but no non-GAAP measure should be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures are provided herein.

EBITDA is defined as net (loss) income (earnings), before interest expense, income taxes, and depreciation and amortization. Adjusted EBITDA excludes stock-based compensation from EBITDA and, when appropriate, other items that management does not utilize in assessing the Company’s ongoing operating performance as set forth in the next paragraph. None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative to net income as an indicator of operating performance or any other GAAP measure.

All of the items included in the reconciliation from net income to EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles, stock-based compensation, impairment losses, etc.) or (ii) items that management does not consider to be useful in assessing the Company’s ongoing operating performance (e.g., income taxes, gain or losses on sale of equipment, severance and transition costs, gain on settlement, expenses to consolidate former Adler facilities, patent litigation and defense costs, other expense (income), EBITDA related to discontinued operations, etc.). In the case of the non-cash items, management believes that investors can better assess the company’s operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect the Company’s ability to generate free cash flow or invest in its business.

We use, and we believe investors benefit from the presentation of, EBITDA and Adjusted EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations. We believe that EBITDA is useful to investors and other external users of our financial statements in evaluating our operating performance because EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, and depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. Additionally, our fixed charge coverage ratio covenant associated with our Loan and Security Agreement with East West Bank require the use of Adjusted EBITDA in specific calculations.

Because not all companies use identical calculations, the Company’s presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating the Company’s performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures.