Table of Contents

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30,December 31, 2022

or

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _____________ to ______________

Commission File Number: 0-30454

Enviro Technologies U.S.,Wolf Energy Services Inc.
(Exact name of registrant as specified in its charter)

821 NW 57th Place, Fort Lauderdale, Florida33309408 State Hwy 135N, Kilgore, Texas 75662
(Address of principal executive offices) (Zip Code)

(954)958-9968903-392-0948
(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 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 during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.

If an emerging growth company, indicate by checkmark if the registrant has not elected to use the extended transition period for complying with any new or revised financial accounting standards 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☒

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: August 15, 2022,February 7, 2023, we had 5,570,12578,268,332 shares of our Common Stock outstanding.

INDEX

STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs. Forward-looking statements include, but are not limited to, statements about risks associated with:

Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report in its entirety, Part I, Item 1A. - Risk Factors in our Annual Report on Form 10-K forincluding the fiscal year ended December 31, 2021 as filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2022 (the “2021 10-K”) and our other filings with the SEC.“Risk Factors” contained herein. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

OTHER PERTINENT INFORMATION

Unless specifically set forth to the contrary, when used in this report the terms “EVTN,“WEON,” the “Company,” “we,” “our,” “us,” and similar terms refers to Wolf Energy Services Inc., formerly known as Enviro Technologies U.S., Inc., a Florida corporation, and our subsidiary, Florida Precision Aerospace, Inc., a Florida corporation which we refer to as “FPA.”subsidiaries. In addition, “second“third quarter of 2022” refers to the three months ended June 30,December 31, 2022 “secondand “third quarter of 2021” refers to the three months ended June 30, 2021, “2021” refers to the year ended December 31, 2021. We maintain a corporate website at www.evtn.com.www.wolf-energy.com. Unless specifically set forth to the contrary, the information which appears on our website at www.evtn.comwww.wolf-energy.com is not part of this report.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

WOLF ENERGY SERVICES INC.

(FORMERLY ENVIRO TECHNOLOGIES U.S., INC. AND SUBSIDIARY)

CONDENSED CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of the condensed consolidated unaudited financial statements. 

December 31, 2022ENVIRO TECHNOLOGIES U.S., INC. (UNAUDITED) AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)March 31, 2022

(FORMERLY ENVIRO TECHNOLOGIES U.S., INC. AND SUBSIDIARY)

’
EQUITY (DEFICIENCY)CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERSOPERATIONS (UNAUDITED)

(Unaudited)

FOR THE For thenine and three months ended June 30,December 31, 2022 and 2021

(FORMERLY ENVIRO TECHNOLOGIES U.S., INC. AND SUBSIDIARY)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)
JUNE 30,December 31, 2022

(UNAUDITED)  and 2021

NOTE A - 1:ORGANIZATION AND OPERATIONSSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Wolf Energy Services Inc., formerly known as Enviro Technologies U.S., Inc., a Florida corporation (the “Company”), isprior to September 7, 2022 was a manufacturer and provider of environmental and industrial separationoperation technology. The Company had developed, manufactured, and now manufactures and sellssold the V-Inline Separator, a technology that efficiently separates liquid/liquid, liquid/solid or liquid/liquid/solid fluid streams with distinct specific gravities. Current and potential commercial applications and markets includeincluded mining, utilities, manufacturing, waste-to-energy among other industries. We also, through a Grant Back License with Schlumberger Technology Corporation signed in June 2017, can utilize specific patents that were sold to Schlumberger under Technology Purchase Agreement for industries outside of oil and gas.

The Company had one subsidiary, Florida Precision Aerospace, Inc., a Florida corporation (“FPA”) prior to the closing of the Exchange (defined below).

Effective September 7, 2002, Ecoark Holdings, Inc., isa Nevada corporation (“Ecoark” or “Ecoark Holdings”) and Banner Midstream Corp. (“Banner” or “Banner Midstream”) completed a Share Exchange Agreement (the “Agreement”) with Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc). Under the Agreement, Ecoark acquired 51,987,832 shares of Wolf Energy Services Inc., (formerly Enviro Technologies U.S., Inc.) common stock in exchange for all the capital stock of Banner owned by Ecoark, which represents 100% of the issued and outstanding shares of Banner (the “Merger”). Upon closing of the Agreement, Banner became a wholly-owned subsidiary of Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc.) via a reverse merger. As a result, the historical financial information of the company is that of Banner.  The transaction was accounted for as a reverse merger whereby Banner Midstream is considered the accounting acquirer. Since the reverse merger occurred with a non-shell public company, the transaction included the purchase of the non-controlling interest of Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc).

Banner was organized under the name Pinnacle Frac Holdings Corp, under the laws of the State of Delaware on April 2, 2018. Pinnacle Frac Holdings Corp was renamed Banner Midstream Corp on December 6, 2018.

Banner Midstream established Pinnacle Frac Sales & Service LLC dba Capstone Equipment Leasing (“Capstone”) as a limited liability company pursuant to the laws of the State of Texas on May 23, 2018, with the Company having ownership of one hundred percent of the issued and outstanding membership interests of Capstone. Capstone is currently structured as a wholly owned subsidiary of the Company. Pinnacle Frac Sales & Service LLC was renamed Capstone Equipment Leasing, LLC by the Office of the Secretary of State of Texas on October 4, 2018. Capstone commenced operations in October 2018 and is usedengaged in the business of procuring and financing equipment to manufacture precision parts along with the manufacture, assemblevarious oilfield transportation services contractors (“owner-operators”).

Banner Midstream has two active operating subsidiaries: Pinnacle Frac Transport LLC (“Pinnacle Frac”), and test the V-Inline Separator. On August 20, 2020, Capstone Equipment Leasing LLC (“Capstone”).

Pinnacle Frac provides transportation of frac sand and logistics services to major hydraulic fracturing and drilling operations. Capstone procures and finances equipment to oilfield transportation service contractors. These two operating subsidiaries of Banner Midstream are revenue producing entities.

In September 2022, the Company’s shareholdersBoard of Directors and management determined that the FPA business will be sold. As this determination represents a strategic shift that will have a major effect on the Company’s operations and financial results, in accordance with ASC 205-20-45-1E, the Company has reclassified FPA’s assets and liabilities as held for sale and presented the results of operations of FPA as discontinued operations, and when FPA is sold, will recognize a gain or loss on disposal.

On September 22, 2022, the Board of Directors approved a change to the Wolf Energy Services Inc. (former Enviro Technologies U.S. Inc.) fiscal year from December 31 to March 31, as a result of domicilethe Merger to conform to Banner's year end.

Forward Split and Corporate Name Change

On January 13, 2023, Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc.) completed a 4-for-1 forward stock split of its issued and outstanding shares of its common stock to shareholders of record as of the close of business on December 30, 2022. The Company filed articles of amendment to its articles of incorporation with the Secretary of State of the State of Florida effective January 17, 2023. Pursuant to a unanimous written consent of the Company’s board of directors, the only change reflected in the articles of amendment is an increase in the authorized number of shares of common stock of the Company from Idaho250,00,000 shares to Florida. 1,000,000,000 shares in connection with the Company’s 4-for-1 forward stock split. Throughout this Quarterly Report on Form 10-Q, common stock share and per share information, including stock award units, options and the Company's convertible note conversion ratio in common stock shares have been revised for all periods presented to give effect to the forward stock split.

On December 28, 2020,30, 2022 the Company’s board of directors and majority shareholder approved a name change of the Company receivedto “Wolf Energy Services Inc.”, as the file stamped Certificatenew name will better reflect the Company’s business and operations.  On January 30, 2023, the Company filed articles of Domestication and Articlesamendment to its articles of Incorporation fromincorporation with the Secretary of State of Florida which wasand after processing by FINRA, the Company has formally changed its name to Wolf Energy Services Inc. effective on December 18, 2020, thereby completing the change in domicile from Idaho to Florida. In connection with the change in domicile from Idaho to Florida, the Company’s name changed to “Enviro Technologies U.S.,February 1, 2023.   Additionally, effective February 1, 2023, Wolf Energy Services Inc.” will begin trading under its new ticker symbol, WOEN.

NOTE B – GOING CONCERN

Since entering into the Technology Purchase Agreement, Supply Agreement and Grant Back License in June 2017, we have generated limited revenues, significantly less than we anticipated, under the termsBasis of any of these agreements. The Supply Agreement expired in June 2020. The Grant Back License did not expire. There are no assurances that the Grant Back License will ever generate any material ongoing revenues. We intend to continue to seek opportunities for the V-Inline Separator. Although we experienced strong revenue growth prior to COVID-19 through the sales of V-Inline and Voraxial Separators, the pandemic created significant cash flow issues that we are trying to work through, including lack of capital for sales and marketing. This has limited our exposure to potential customers. Our ability to increase our revenues in future periods will depend on a number of factors, many of which are beyond our control, including our ability to generate sales of the V-Inline Separator, our ability to leverage the Grant Back License to generate additional revenues, the continuing impact of the Covid-19 pandemic on the economy in general and the Company in particular, competitive efforts and other general economic trends. There are no assurances we will return to the pre-Covid revenue and profitability levels of 2019 or report profitable operations in the future. Further, the lingering economic impact of the Covid-19 pandemic may have a continued negative effect on the potential for sales of V-inline Separators.Presentation

At June 30, 2022, we had a working capital deficit of $1,445,859, an accumulated deficit of $16,919,328. We do not have any external sources of liquidity. Our revenues have declined significantly from quarter ended and year ended December 31, 2019, our last full reporting period prior to the start of Covid-19 pandemic and has yet to recover. Covid-19 pandemic has created a very challenging economic condition for our company. In an effort to conserve our cash resources to sustain our operations until such time as the economy begins returning to pre-Covid-19 pandemic activity levels, we have reduced employee hours, continue to accrue management’s salary, and sold under-utilized equipment. We also have begun marketing our machining capabilities to local manufactures. There are no assurances, however, that these efforts will be sufficient to permit us to pay our operating expenses. In the event we cannot increase our revenues, we may be required to scale back or cease operations, sell or liquidate our assets and possibly seek bankruptcy protection.

As a result of the above, there is substantial doubt about the ability of the Company to continue as a going concern and the accompanyingThe Company’s unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.

ENVIRO TECHNOLOGIES U.S., INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

JUNE 30, 2022

(UNAUDITED) 

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The condensed consolidated financial statements presented herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordanceconformity with accounting principles generally accepted in the United States (GAAP). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of Americathe Financial Accounting Standards Board (FASB).

All adjustments considered necessary for a fair presentation have been included. These adjustments consist of normal and recurring accruals, as well as non-recurring charges.

As the reverse merger transaction resulted in the owner of Banner gaining control over the combined entity after the transaction, and the shareholders of Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc.) continuing only as passive investors, the transaction was not considered a business combination under the ASC. Instead, this transaction was considered to be a capital transaction of the legal acquiree (Banner) and was equivalent to the issuance of shares by Banner for the net monetary assets of Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc.) accompanied by a recapitalization, except for the purchase of the 22,280,500 shares of issued and outstanding common shares of Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc.) which were considered as purchase consideration resulting in $3,613,144 of goodwill that was impaired immediately. As a result, the historical balances represent Banner. See Note 2, “Reverse Merger” for full details on the accounting for the reverse merger.

The condensed or omitted pursuant to such rulesconsolidated financial statements, and regulations. Thethe accompanying notes, are prepared in accordance with GAAP and do not contain certain information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as well as the Banner audited financial statements that are reflected in Form 8-K/A filed by the Company on October 31, 2022. Therefore, the interim condensed consolidated financial statements should be read in conjunction with the company’s annual consolidated financial statements, notes and accounting policies included in the Company’s Annual Report on Form 10-Kthose reports. Operating results for the year ended December 31, 2021, as filed with the SEC on April 15, 2022. In the opinion of management, all adjustments, which are necessary to provide a fair presentation of financial position as of June 30, 2022, and the related operating results and cash flows for the interim period presented, have been made. The results of operations, for the periodperiods presented are not necessarily indicative of the results to that may be expected for the year.year due to various factors.

Principles of Consolidation

The unaudited condensedCompany prepares its consolidated financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the parent company, Enviro Technologies U.S., Inc.,Company and its wholly-owned subsidiary, Florida Precision Aerospace, Inc. wholly owned subsidiaries, all of which have a year end of March 31. All significant intercompany accounts, balances and transactions have been eliminated.eliminated in the consolidation.

Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of AmericaU.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosuresdisclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenuerevenues and expenses during the reporting period. SignificantThese estimates include, valuationbut are not limited to, management’s estimate of deferred taxprovisions required for uncollectible accounts receivable, impaired value of equipment and intangible assets, allowance for doubtful accountsliabilities to accrue, cost incurred in the satisfaction of performance obligations, permanent and allowance for inventory obsolescence. Actual results may differ.temporary differences related to income taxes, to present these consolidated financial statements on a standalone basis and determination of the fair value of stock awards.

Actual results could differ from those estimates.

Revenue Recognition

We account for our revenues in accordance with the Accounting Standard Codification Topic The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” and allCustomers. The core principle of the related amendments. This standards core principalrevenue standard is that a company should recognize revenue when it transfersto depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to receive.

The Company derives its revenue from the sale of the V-Inline Separators and some high precision manufacturing projects.

Revenues that are generated from high precision manufacturing projects are recognized when we satisfy a performance obligation by transferring control of the promised goods or services to our customers at a point in time, in an amount specified in the contract with our customer and that reflects the consideration we expect to be entitled to in exchange for those goods or services. The Company also assesses our customer’s abilityfollowing five steps are applied to achieve that core principle:

In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and intentionidentify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met: The customer can benefit from the good or service either on its own or together with other resources that are readily available to pay, whichthe customer (i.e., the good or service is based on a varietycapable of factors including our customer’s historical payment experiencebeing distinct), and financial condition.the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

RevenuesIf a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services is identified that are generated from sales of V-Inline separators, auxiliary equipment and parts are typically recognized upon shipment. Our standard agreements generally do not include customer acceptance or post shipment installation provisions. However, if such provisions have been included or there is an uncertainty about customer order, revenue is deferred until we have evidence of customer order and all terms of the agreement have been complied with. As of June 30, 2022, and December 31, 2021, respectively, there was $0 of deposits from customers.distinct.

ENVIRO TECHNOLOGIES U.S., INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

JUNE 30, 2022

(UNAUDITED) 

ACCOUNTS RECEIVABLE

Accounts receivable are presented net of an allowance for doubtful accounts. The company maintains allowances for doubtful accounts for estimated losses. The company reviews the accounts receivable on a periodic basis and makes general and specific allowance when there is a doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer’s historical payment history, and its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collections. At June 30, 2022 and December 31, 2021, the Company has $7,044 and $7,044 in the allowance for doubtful accounts, respectively.

Fair Value of Instruments

The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, inventory, accounts payable and accrued expenses at June 30, 2022 and December 31, 2021, approximate their fair value because of their relatively short-term nature.

ASC 820 “Disclosures about Fair Value of Financial Instruments,” requires disclosures of information regarding the fair value of certain financial instruments for which it is practicable to estimate the value. For purpose of this disclosure, the fair value of a financial instrumenttransaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. When determining the transaction price, an entity must consider the effects of all the following:

Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The transaction price is allocated to each performance obligation on a relative standalone selling price basis. The standalone selling price is the price at which the instrument couldCompany would sell a promised service separately to a customer. The relative selling price for each performance obligation is estimated using observable objective evidence if it is available. If observable objective evidence is not available, the Company uses its best estimate of the selling price for the promised service. In instances where the Company does not sell a service separately, establishing standalone selling price requires significant judgment. The Company estimates the standalone selling price by considering available information, prioritizing observable inputs such as historical sales, internally approved pricing guidelines and objectives, and the underlying cost of delivering the performance obligation. The transaction price allocated to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.

Management judgment is required when determining the following: when variable consideration is no longer probable of significant reversal (and hence can be exchangedincluded in revenue); whether certain revenue should be presented gross or net of certain related costs; when a current transaction between willing parties, other thanpromised service transfers to the customer; and the applicable method of measuring progress for services transferred to the customer over time.

The Company recognizes revenue upon satisfaction of its performance obligation at a point in a forced sale of liquidation.time or over time in accordance with ASC 606-10-25.

The Company accounts for incremental costs of obtaining a contract with a customer and contract fulfilment costs in accordance with ASC 340-40,Other Assets and Deferred Costs. These costs should be capitalized and amortized as the performance obligation is satisfied if certain assetscriteria are met. The Company elected the practical expedient, to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that would otherwise have been recognized is one year or less, and liabilities at fair value.expenses certain costs to obtain contracts when applicable. The hierarchy below lists three levelsCompany recognizes an asset from the costs to fulfill a contract only if the costs relate directly to a contract, the costs generate or enhance resources that will be used in satisfying a performance obligation in the future and the costs are expected to be recovered. The Company recognizes the cost of sales of a contract as expense when incurred or when a performance obligation is satisfied. The incremental costs of obtaining a contract are capitalized unless the costs would have been incurred regardless of whether the contract was obtained, are not considered recoverable, or the practical expedient applies.

The Company recognizes revenue for their proportionate share of revenue when: (i) the Company receives notification of the successful delivery of a load of frac sand or other material to a buyer; (ii) the buyer will provide a fixed price based on distance between origination and destination point; and (iii) cash is received within one business day from the factoring agent.

Cost of sales for the Company includes all direct expenses incurred to produce the revenue for the period. This includes, but is not limited to, direct employee labor, direct contract labor and fuel.

Revenue under master service agreements is recorded upon the performance obligation being satisfied. Typically, the satisfaction of the performance obligation occurs upon the frac sand load being delivered to the customer site and this load being successfully invoiced and accepted by the Company’s factoring agent.

Accounts Receivable and Concentration of Credit Risk

The Company considers accounts receivable, net of allowance for doubtful accounts, to be fully collectible. The allowance is based on management’s estimate of the overall collectability of accounts receivable, considering historical losses, credit insurance and economic conditions. Based on these same factors, individual accounts are charged off against the allowance when management determines those individual accounts are uncollectible. Credit extended to customers is generally uncollateralized, however credit insurance is obtained for some customers. Past-due status is based on contractual terms.

For the Company, accounts receivable is comprised of unsecured amounts due from customers that have been conveyed to a factoring agent for both with and without recourse. The Company receives an advance from the factoring agent of 98% of the amount invoiced to the customer within one business day. The Company recognizes revenue for 100% of the gross amount invoiced, records an expense for the 2% finance charge by the factoring agent, and realizes cash for the 98% net proceeds received.

Fair Value Measurements

ASC 820Fair Value Measurements defines fair value, based on the extent to which inputs used inestablishes a framework for measuring fair value is observable in the market. We categorize each of ouraccordance with GAAP, and expands disclosure about fair value measurements in one ofmeasurements. ASC 820 classifies these three levels based oninputs into the lowest level input that is significant to the fair value measurement in its entirety. These levels are:following hierarchy:

Level 1—inputs are based upon unadjusted quoted1 inputs: Quoted prices for identical instruments traded in active markets. We have no Level 1 instruments as of June 30, 2022 and December 31, 2021.

Level 2— inputs are based upon quoted2 inputs: Quoted prices for similar instruments in active markets,markets; quoted prices for identical or similar instruments in markets that are not active, active; and model-based valuation techniques (e.g. the Black-Scholes model) for which all significantmodel-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 inputs: Instruments with primarily unobservable value drivers.

The carrying values of the Company’s financial instruments such as cash, accounts payable, and accrued expenses approximate their respective fair values because of the short-term nature of those financial instruments.

Impairment of Long-lived Assets

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the market or cancarrying amount of an asset may not be corroboratedrecoverable. Recoverability of assets to be held and used is measured by observable market data for substantiallya comparison of the full termcarrying amount of an asset to the undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Earnings (Loss) Per Share of Common Stock

Basic net income (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings (loss) per share (“EPS”) include additional dilution from common stock equivalents, such as convertible notes. The Company as of and for the nine months ended December 31, 2022 and 2021 had no common stock equivalents.

Recently Issued Accounting Standards

The Company does not discuss recent pronouncements that are not anticipated to have an impact on or liabilities. Where applicable, these models project futureare unrelated to its financial condition, results of operations, cash flows or disclosures.

Liquidity

For the nine months ended December 31, 2022 and discount2021, the future amounts toCompany had a present value using market-based observable inputsnet (loss) income from continuing operations (not including interest rate curves, foreign exchange rates,the provisions for income taxes) of ($6,068,407) and forward$4,060,056, respectively, has a working capital deficit of $1,537,872 and spot prices for currencies and commodities. We have no Level 2 instruments$1,607,004 as of June 30, 2022 and December 31, 2021.2022 and March 31, 2022, and has an accumulated deficit as of December 31, 2022 of ($9,050,437). As of December 31, 2022, the Company has $342,705 in cash and cash equivalents.

Level 3— inputsBanner has historically relied on Ecoark to provide the necessary capital to sustain its operations. The Company has included cost allocations as noted herein to reflect the operations as if they were a standalone entity.

The financial statements of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period. The financial statements of the Company do not include any adjustments that may result from the outcome of the uncertainties.

The Company plans include the raising of capital through a private placement of its securities, although there are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricingno assurances the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. We have no Level 3 instruments as of June 30, 2022 and December 31, 2021.Company will be successful at raising any capital.

CashImpact of COVID-19

COVID-19may continue to affect the economy and Cash Equivalentsthe industries in which the Company operates, depending on the vaccine and booster rollouts and the emergence of virus mutations.

COVID-19 did not have a material effect on the Statements of Operations or the Balance Sheets for the nine months ended December 31, 2022 and 2021.  

COVID-19 has contributed to the supply chain disruptions, which have not yet had a material effect for the Company. The Company considers allwill continue to monitor the supply chain shortages affecting the world.

Because the federal government and some state and local authorities are reacting to the variants of COVID-19, it is creating uncertainty on whether these actions could disrupt the operation of the Company’s business and have an adverse effect on the Company. The extent to which the COVID-19 outbreak may impact the Company’s results will depend on future developments that are highly liquid investments with a maturityuncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.

Correction of Immaterial Misstatement

During the quarter ended September 30, 2022, the Company, in its previously issued condensed consolidated financial statements for the three months or less atended September 30, 2022, classified $4,900,873 of goodwill in additional paid in capital upon the dateSeptember 7, 2022 reverse merger between Banner Midstream Corp. and Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc). The goodwill was the result of purchase to be cash equivalents.the Banner Midstream Corp.'s reporting unit from the previous parent of Banner Midstream Corp., Ecoark Holdings, Inc.

During the quarter ended December 31, 2022, the Company became aware of the reclassification and has adjusted both goodwill and additional paid in capital by $4,900,873.  The Company maintains its cash balances with various financial institutions. Balances at these institutions may at times exceed the Federal Deposit Insurance Corporate (“FDIC”) limits. Ashas determined that there is no impairment of June 30, 2022 and this goodwill as of December 31, 2021,2022 or September 30, 2022.

Based on an analysis of ASC 250 “Accounting Changes and Error Corrections”, Staff Accounting Bulletin 99 “Materiality” and Staff Accounting Bulletin 108 “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”, the Company has 0 cash concentration in excess of FDIC limits.determined that this error was immaterial to the previously issued consolidated financial statements for the six months ended September 30, 2022.

NOTE 2: REVERSE MERGER

InventoryIn accordance with ASC 805-40-45-1, the consolidated financial statements prepared following a reverse acquisition are issued under the name of the legal parent (Wolf Energy Services Inc.) but described in the notes to the financial statements as a continuation of the financial statements of the legal subsidiary (Banner), with one adjustment, which is to retroactively adjust the accounting acquirer’s legal capital to reflect the legal capital of the accounting acquiree. That adjustment is required to reflect the capital of the legal parent. Comparative information presented in the consolidated financial statements also is retroactively adjusted to reflect the legal capital of the legal parent.

Inventory primarily consists

Under ASC 805-40-45-2, the consolidated financial statements represent the continuation of the legal subsidiary except for the V-Inline Separatorcapital structure, as follows:

Wolf Energy Services Inc, (formerly Enviro Technologies U.S., Inc.) issued Ecoark Holdings, Inc. 51,987,832 shares of common stock valued at $5,328,753 in the reverse merger transaction.

On September 7, 2022, the Company completed the reverse merger transaction of Banner Midstream. As a result of this transaction, which is accounted for as a reverse merger, Banner is a wholly owned subsidiary of Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc). In accordance with the terms of the Merger, at the effective time of the Merger, each outstanding share of the common stock of Banner was acquired by the Company in consideration of 51,987,832 shares of Common Stock of the Company. This exchange of shares and face shieldsthe resulting controlling ownership of Banner constitutes a reverse acquisition resulting in a recapitalization of Banner and purchase accounting being applied to Wolf Energy Services Inc. (formerly Enviro Technologies U.S., Inc.) under ASC 805 due to Banner being the accounting acquirer and Wolf Energy Services, Inc. (formerly Enviro Technologies U.S., Inc.) being deemed an acquired business as they were not a shell corporation. This requires financial reporting from the Merger close date forward to reflect only the historic consolidated results of Banner and to include the consolidated results for Wolf Energy Services (formerly Enviro Technologies U.S., Inc.) from September 7, 2022, forward.