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 September 30, ~~2020~~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~~name of registrant as ~~Specified~~specified in its ~~Charter)~~charter)

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

14133 ~~County Rd~~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 each exchange on which registered~~
~~Common Stock, par value $0.005 per share~~		~~ENSV~~		~~New York Stock Exchange~~

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~~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 ~~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~~"large accelerated filer,~~” “accelerated filer”, “smaller~~" "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~~registrant's classes of common stock as of the latest practicable date.

Class		Outstanding at November ~~9, 2020~~10, 2021
Common stock, $.005 par value		~~77,137,597~~11,432,284

Table of Contents

TABLE OF CONTENTS

	Page

Part I – Financial Information

Item 1. Financial Statements

Condensed Consolidated Balance Sheets	23

Condensed Consolidated Statements of Operations	34

Condensed Consolidated Statements of Stockholders' Equity ~~(Deficit)~~	45

Condensed Consolidated Statements of Cash Flows	5
	6
Notes to the Condensed Consolidated Financial Statements	6
	7
Item 2. ~~Management~~’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3. Quantitative and Qualitative Disclosures about Market Risk	3639

Item 4. Controls and Procedures	3639


Part II

Item 1. Legal Proceedings	3740

Item 1A. Risk Factors	3740

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	3841

Item 3. Defaults Upon Senior Securities	3841

Item 4. Mine Safety Disclosures	3841

Item 5. Other Information	3841

Item 6. Exhibits	3842

~~Signatures~~	39

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ENSERVCO CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

	September 30,			December 31,
	2020			2019
	(Unaudited)						September 30, 2021			December 31, 2020
ASSETS
Current Assets
Current Assets:
Cash and cash equivalents	$	-		$	663		$	1,673		$	1,467
Accounts receivable, net		1,012			6,424			2,279			1,733
Prepaid expenses and other current assets		1,609			1,016			2,456			858
Inventories		310			398			371			295
Income tax receivable, current		57			43
Current assets of discontinued operations		-			187
Assets held for sale								527			527
Total current assets		2,988			8,731			7,306			4,880

Property and equipment, net		22,590			26,620			17,070			20,317
Goodwill		546			546			546			546
Intangible assets, net		672			828			454			617
Income taxes receivable, non-current		-			14
Right-of-use asset - financing, net		148			569
Right-of-use asset - finance, net								50			129
Right-of-use asset - operating, net		3,124			3,793			2,279			2,918
Other assets		349			445			404			423
Non-current assets of discontinued operations		809			1,430			0			353

TOTAL ASSETS	$	31,226		$	42,976		$	28,109		$	30,183

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	2,540		$	4,470		$	1,635		$	1,931
Senior revolving credit facility, related party (including future interest payable of $950 and $0, respectively - see Note 2 and Note 7)		950			33,994
Subordinated debt, related party		-			2,381
Lease liability - financing, current		64			207
Senior revolving credit facility, related party (including future interest payable of $772 and $892, respectively - see Note 5)								2,000			1,593
Lease liability - finance, current								26			65
Lease liability - operating, current		836			848			775			854
Current portion of long-term debt		110			147			57			100
Current liabilities of discontinued operations		31			72			0			31
Total current liabilities		4,531			42,119			4,493			4,574

Long-Term Liabilities
Senior revolving credit facility, related party (including future interest payable of $822 and $0, respectively - see Note 2 and Note 7)		17,931			-
Non-Current Liabilities:
Senior revolving credit facility, related party (including future interest payable of $20 and $485, respectively - see Note 5)								12,792			17,485
Subordinated debt, related party		1,168			-			0			1,180
Long-term debt, less current portion		2,066			198			69			2,052
Lease liability - financing, less current portion		72			259
Lease liability - finance, less current portion								26			55
Lease liability - operating, less current portion		2,406			3,009			1,631			2,185
Other liability		33			33
Other liabilities								24			88
Long-term liabilities of discontinued operations		15			34			0			9
Total long-term liabilities		23,691			3,533
Total liabilities		28,222			45,652
Total non-current liabilities								14,542			23,054

Commitments and Contingencies (Note 10)
TOTAL LIABILITIES								19,035			27,628

Stockholders' Equity (Deficit)
Commitments and Contingencies (Note 7)

Stockholders' Equity:
Preferred stock, $.005 par value, 10,000,000 shares authorized, no shares issued or outstanding		-			-			0			0
Common stock. $.005 par value, 100,000,000 shares authorized, 70,088,783 and 55,642,829 shares issued, respectively; 103,600 shares of treasury stock; and 69,985,183 and 55,539,229 shares outstanding, respectively		352			278
Common stock, $.005 par value, 100,000,000 shares authorized; 11,439,191 and 6,307,868 shares issued as of September 30, 2021 and December 31, 2020, respectively; 6,907 shares of treasury stock as of September 30, 2021 and December 31, 2020, respectively; and 11,432,284 and 6,300,961 shares outstanding as of September 30, 2021 and December 31, 2020, respectively								57			32
Additional paid-in capital		26,461			22,066			40,502			30,052
Accumulated deficit		(23,809	)		(25,020	)		(31,485	)		(27,529	)
Total stockholders' equity (deficit)		3,004			(2,676	)
Total stockholders' equity								9,074			2,555

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	31,226		$	42,976
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY							$	28,109		$	30,183

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

For the Nine Months Ended

September 30,

September 30,

2020

2019

2020

2019

Revenues

Production services
$ 1,363 $ 3,288 $ 5,948 $ 11,239
Completion services
401 510 7,343 23,711
Total revenues
1,764 3,798 13,291 34,950

Expenses

Production services
1,347 3,305 6,655 9,994
Completion services
1,126 1,710 7,613 16,829
Sales, general, and administrative expenses
1,049 1,712 4,058 4,772
Patent litigation and defense costs - - - 10
Severance and transition costs
- 83 139 83
Loss (gain) on disposal of assets
21 - 59

(4
)
Impairment loss
- - - 127
Depreciation and amortization
1,271 1,404 3,977 4,246
Total operating expenses
4,814 8,214 22.501 36.057

Loss from operations
(3,050
)
(4,416
)
(9,210
)
(1,107
)

Other income (expense)

Interest expense
(477
)
(695
)
(1,665
)
(2,235
)
Gain on restructuring of senior revolving credit facility (Note7) 11,916 - 11,916 -
Other income (expense)
29

(67 ) 125

1,070

Total other income (expense)
11,468

(762
)
10,376

(1,165
)

Income (loss) from continuing operations before tax expense
8,418

(5,178
)
1,166

(2,272
)
Income tax expense
(6 ) - (15
)

(32
)
Income (loss) from continuing operations
$ 8,412

$ (5,178
)
$ 1,151

$ (2,304
)

(Loss) income from discontinued operations (Note 6)
(7) (226
)
60 (2,006
)
Net income (loss)
$ 8,405

$ (5,404
)
$ 1,211

$ (4,310
)

Earnings (loss) from continuing operations per common share - basic
$ 0.14

$ (0.09
)
$ 0.02

$ (0.04
)
Loss from discontinued operations per common share - basic
- (0.01
)
- (0.04
)
Net income (loss) per share - basic
$ 0.14

$ (0.10
)
$ 0.02

$ (0.08
)

Earnings (loss) from continuing operations per common share - diluted
$ 0.14

$ (0.09
)
$ 0.02

$ (0.04
)
Loss from discontinued operations per common share - diluted
- (0.01
)
- (0.04
)
Net income (loss) per share - diluted
$ 0.14

$ (0.10
)
$ 0.02

$ (0.08
)

Basic weighted average number of common shares outstanding
58,649 55,457 56,514 54,925
Diluted weighted average number of common shares outstanding
58,649 55,457 56,514 54,925

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Revenues:
Production services	$	2,483		$	1,363		$	6,556		$	5,948
Completion and other services		544			401			4,701			7,343
Total revenues		3,027			1,764			11,257			13,291

Expenses:
Production services		2,489			1,347			6,802			6,655
Completion and other services		1,189			1,126			5,680			7,613
Sales, general, and administrative expenses		907			1,049			2,904			4,058
Severance and transition costs		0			0			0			139
Loss on disposal of equipment		0			21			70			59
Depreciation and amortization		1,302			1,271			3,975			3,977
Total operating expenses		5,887			4,814			19,431			22,501

Loss from operations		(2,860	)		(3,050	)		(8,174	)		(9,210	)

Other (expense) income:
Interest expense		(6	)		(477	)		(50	)		(1,665	)
Gain on restructuring of senior revolving credit facility (Note 5)		0			11,916			0			11,916
Other income		2,689			29			4,276			125
Total other income		2,683			11,468			4,226			10,376

(Loss) income from continuing operations before taxes		(177	)		8,418			(3,948	)		1,166
Income tax expense		0			(6	)		0			(15	)
(Loss) income from continuing operations		(177	)		8,412			(3,948	)		1,151
(Loss) income from discontinued operations		0			(7	)		(8	)		60
Net (loss) income	$	(177	)	$	8,405		$	(3,956	)	$	1,211


(Loss) income from continuing operations per common share - basic and diluted	$	(0.02	)	$	2.15		$	(0.37	)	$	0.31
Income from discontinued operations per common share - basic and diluted		0			0			0			0.01
Net (loss) income per share - basic and diluted	$	(0.02	)	$	2.15		$	(0.37	)	$	0.32

Weighted average number of common shares outstanding - basic and diluted		11,433			3,910			10,692			3,768

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

Balance at January 1, 2019		54,286		$	271	$	21,797		$	(17,466	)	$	4,602
Opening balance adjustment		-			-		-			108			108
Balance at January 1, 2020																3,703		$	19	$	22,325	$	(25,020	)	$	(2,676	)
Stock-based compensation, net of issuance costs		-			-		92			-			92			-			0		39		0			39
Restricted share cancellation		(55	)		-		-			-			-			(2	)		0		0		0			0
Net income		-			-		-			4,303			4,303
Balance at March 31, 2019		54,231			271		21,889			(13,055	)		9,105
Net loss																-			0		0		(2,837	)		(2,837	)
Balance at March 31, 2020																3,701		$	19	$	22,364	$	(27,857	)	$	(5,474	)

Stock-based compensation, net of issuance costs		-			-		77			-			77			-			0		322		0			322
Restricted share issuance		1,123			6		(6	)		-			-			7			0		0		0			0
Restricted share cancellation		(25	)		-		-			-			-			(45	)		0		0		0			0
Restricted share vested																-			0		5		0			5
Net loss		-			-		-			(3,209	)		(3,209	)		-			0		0		(4,357	)		(4,357	)
Balance at June 30, 2019		55,329			277		21,960			(16,264	)		5,973
Balance at June 30, 2020																3,663		$	19	$	22,691	$	(32,214	)	$	(9,504	)

Opening balance adjustment		-			-		-			(10	)		(10	)
Stock-based compensation, net of issuance costs		-			-		53			-			53			-			0		16		0			16
Restricted share issuance		330			1		(2	)		-			(1	)
Restricted share cancellation		(160	)		-		-			-			-			(3	)		0		0		0			0
Net loss		-			-		-			(5,404	)		(5,404	)
Balance at September 30, 2019		55,499		$	278	$	22,011		$	(21,678	)	$	611
Shares issued to Cross River Partners, L.P. in subordinated debt and accrued interest conversion																404			2		1,513		0			1,515
Shares and warrants issued to East West Bank in senior revolving credit debt restructuring																533			2		2,530		0			2,532
Shares issued in at-the-market offering, net of offering costs																69			0		40		0			40
Net income																-			0		0		8,405			8,405
Balance at September 30, 2020																4,666		$	23	$	26,790	$	(23,809	)	$	3,004

Common
Shares

Common
Stock

Additional
Paid-in
Capital

Accumulated
Earnings
(Deficit)

Total
Stockholders’
Equity (Deficit)

Balance at January 1, 2020
55,539 $ 278 $ 22,066 $ (25,020
)
$ (2,676
)
Stock-based compensation, net of issuance costs
- - 39 - 39
Restricted share cancellation (30 ) (3 ) 3 - -
Net loss - - - (2,837 ) (2,837 )
Balance at March 31, 2020 55,509 275 22,108 (27,857 ) (5,474 )

Stock-based compensation, net of issuance costs - - 322 - 322
Restricted share issuance 100 (4 ) 4 - -
Restricted share cancellation (682 ) (1 ) 1 - -
Restricted shares vested - 5 - - 5
Net loss - - - (4,357 )
(4,357
)
Balance at June 30, 2020
54,927 275 22,435 (32,214
)
(9,504
)

Stock-based compensation, net of issuance costs - - 16 - 16
Restricted share cancellation (42) - - - -
Shares issued to Cross River Partners, L.P. in subordinated debt and accrued interest conversion (Note 2)
6,054 31 1,484 - 1,515
Shares and warrants issued to East West Bank in senior revolving credit debt restructuring (Note 2 and Note 7) 8,000 40 2,492 - 2,532
Shares issued in at-the-market offering, net of offering costs (Note 2) 1,046 6 34 - 40
Net income - - - 8,405 8,405
Balance at September 30, 2020 69,985 $ 352 $ 26,461 $ (23,809 ) $ 3,004

	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		-			0		24		0			24
Shares issued in offering, net of issuance costs		4,200			21		8,824		0			8,845
Shares issued to Cross River Partners, L.P. in subordinated debt and accrued interest conversion, net of discount		602			3		1,246		0			1,249
Restricted share issuances		330			1		310		0			311
Net loss		-			0		0		(2,173	)		(2,173	)
Balance at March 31, 2021		11,433		$	57	$	40,456	$	(29,702	)	$	10,811

Stock-based compensation		-			0		25		0			25
Net loss		-			0		0		(1,606	)		(1,606	)
Balance at June 30, 2021		11,433		$	57	$	40,481	$	(31,308	)	$	9,230

Stock-based compensation		-			0		21		0			21
Restricted share cancellation		(1	)		-		-		-			-
Net loss		-			0		0		(177	)		(177	)
Balance at September 30, 2021		11,432		$	57	$	40,502	$	(31,485	)	$	9,074

See accompanying notes to the condensed consolidated financial statements.

Table of Contents

ENSERVCO CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

For the Nine Months Ended

September 30,

2020

2019

OPERATING ACTIVITIES

Net income (loss)
$ 1,211 $ (4,310 )
Net income (loss) from discontinued operations 60 (2,006 )
Net income (loss) from continuing operations
1,151 (2,304 )
Adjustments to reconcile net income (loss) to net cash used in operating activities

Depreciation and amortization
3,977 4,245
Loss (gain) on disposal of equipment 59 (4 )
Gain on settlement (Note 4) - (1,252 )
Impairment loss - 127
Stock-based compensation
377 221
Amortization of debt issuance costs and discount
119 273
Gain on restructuring of senior revolving credit facility (Note7) (11,916 ) -
Lease termination expense - 62
Provision for bad debt expense
362 171
Changes in operating assets and liabilities

Accounts receivable
5,048 7,213
Inventories
88 176
Prepaid expense and other current assets
(593 ) 281
Income taxes receivable (14 ) -
Amortization of operating lease assets 635 599
Other assets
363 239
Accounts payable and accrued liabilities
(1,469 ) (342 )
Operating lease liabilities (615 ) (546 )
Other liabilities - 104
Net cash (used in) provided by operating activities - continuing operations (2,428 ) 9,263
Net cash provided by (used in) operating activities - discontinued operations 133 (775)
Net cash (used in) provided by operating activities (2,295 ) 8,488

INVESTING ACTIVITIES

Purchases of property and equipment
(344 ) (859 )
Proceeds from insurance claims 294 27
Proceeds from disposals of property and equipment 341 219
Net cash provided by (used in) investing activities - continuing operations 291 (613 )
Net cash provided by investing activities - discontinued operations 675 413
Net cash provided by (used in) investing activities 966 (200 )

FINANCING ACTIVITIES

Gross proceeds from stock issuance 205 -
Stock issuance costs and registration fees (165 ) -
Net line of credit payments
(855 ) (4,474 )
Proceeds from PPP loan (Note 7) 1,940 -
Repayment of long-term debt
(109 ) (92 )
Payments of finance leases (350 ) (279 )
Repayment of note - (3,700 )
Other financing activities - (1 )
Net cash provided by (used in) financing activities - continuing operations 666 (8,546 )
Net cash provided by financing activities - discontinued operations - 1
Net cash provided by (used in) financing activities 666 (8,545 )

Net Decrease in Cash and Cash Equivalents (663 ) (257)

Cash and Cash Equivalents, beginning of period 663 257

Cash and Cash Equivalents, end of period
$ - $ -

Supplemental Cash Flow Information:

Cash paid for interest
$ 1,415 $ 1,794
Cash paid for taxes 2 32
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 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 common stock 1,515 -
Non-cash conversion of accrued interest to senior revolving credit facility 219 -
Non-cash proceeds from revolving credit facilities
- 125

	For the Nine Months Ended
	September 30,
	2021			2020
OPERATING ACTIVITIES:
Net (loss) income	$	(3,956	)	$	1,211
Net (loss) income from discontinued operations		(8	)		60
Net (loss) income from continuing operations		(3,948	)		1,151
Adjustments to reconcile net (loss) income to net cash used in operating activities
Depreciation and amortization		3,975			3,977
Loss on disposal of equipment		70			59
Board compensation issued in equity		311			0
Stock-based compensation		70			377
Amortization of debt issuance costs and discount		8			119
Gain on restructuring of senior revolving credit facility		0			(11,916	)
Gain on forgiveness of PPP loan (Note 5)		(1,964	)		0
Provision for bad debt (recovery) expense		(15	)		362
Changes in operating assets and liabilities:
Accounts receivable		(531	)		5,048
Inventories		(76	)		88
Prepaid expense and other current assets		(1,596	)		(593	)
Income taxes receivable		0			(14	)
Amortization of operating lease assets		638			635
Other assets		92			363
Accounts payable and accrued liabilities		(224	)		(1,469	)
Operating lease liabilities		(633	)		(615	)
Other liabilities		(64	)		0
Net cash used in operating activities - continuing operations		(3,887	)		(2,428	)
Net cash provided by operating activities - discontinued operations		4			133
Net cash used in operating activities		(3,883	)		(2,295	)

INVESTING ACTIVITIES:
Purchases of property and equipment		(348	)		(344	)
Proceeds from insurance claims		0			294
Proceeds from disposals of property and equipment		65			341
Net cash (used in) provided by investing activities - continuing operations		(283	)		291
Net cash provided by investing activities - discontinued operations		0			675
Net cash (used in) provided by investing activities		(283	)		966

FINANCING ACTIVITIES:
Gross proceeds from stock issuance		9,660			205
Stock issuance costs and registration fees		(815	)		(165	)
Term loan repayment		(3,000	)		0
Net line of credit repayments		(701	)		(855	)
Proceeds from PPP loan (Note 5)		0			1,940
TDR accrued future interest payments		(585	)		0
Repayment of long-term debt		(86	)		(109	)
Payments of finance leases		(99	)		(350	)
Net cash provided by financing activities - continuing operations		4,374			666
Net cash used in financing activities - discontinued operations		(2	)		0
Net cash provided by financing activities		4,372			666

Net Increase (Decrease) in Cash and Cash Equivalents		206			(663	)

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

Cash and Cash Equivalents, end of period	$	1,673		$	0


Supplemental Cash Flow Information:
Cash paid for interest	$	630		$	1,415
Cash paid for taxes		0			2
Supplemental Disclosure of Non-cash Investing and Financing Activities:
Non-cash conversion of subordinated debt and accrued interest to Company common stock	$	1,312		$	1,515
Non-cash conversion of unamortized subordinated debt discount		61			0
Non-cash reduction of debt in connection with restructuring of senior revolving credit facility		0			16,000
Non-cash issuance of Company common stock and warrants in connection with restructuring of senior revolving credit facility		0			2,532
Non-cash conversion of accrued interest to senior revolving credit facility		0			219

See accompanying notes to the c~~condensed~~ondensed consolidated financial statements.

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ENSERVCO CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Note 1 – Basis of Presentation

Enservco Corporation ~~(“Enservco”~~("Enservco") through its wholly-owned subsidiaries (collectively referred to as the ~~“Company”~~"Company", ~~“we”~~"we" or ~~“us”~~"us") provides various services to the domestic onshore oil and natural gas industry. These services include ~~frac water heating (completion services) and~~ hot oiling and acidizing ~~(production services)~~("Production Services") and frac water heating ("Completion and Other Services").

The accompanying unaudited condensed consolidated financial statements have been derived from the accounting records of Enservco Corporation, Heat Waves Hot Oil Service LLC (“("Heat ~~Waves”~~Waves"), Dillco Fluid Service, Inc. ~~(“Dillco”~~("Dillco"), Heat Waves Water Management LLC ~~(“HWWM”~~("HWWM"), and Adler Hot Oil Service, LLC ("Adler") (collectively, the ~~“Company”~~"Company") as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 and the results of operations for the three and ninemonths ended September 30, ~~2020~~2021 and ~~2019.~~2020.

The below table provides an overview of the Company’s current ownership hierarchy:

Name	~~Name~~State of Formation	~~State of~~ ~~Formation~~Ownership	~~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.
			Adler Hot Oil Service, LLC was dissolved during the second quarter of 2021.
Heat Waves Water Management LLC	Colorado	100% by Enservco	Discontinued operations in ~~2019~~2019. Heat Waves Water Management LLC was dissolved during the second quarter of 2021.

Dillco Fluid Service, Inc	Kansas	100% by Enservco	Discontinued ~~operation~~operations in ~~2018~~
			2018. Dillco Fluid Service, Inc was dissolved during the second quarter of 2021.
HE Services LLC	Nevada	100% by Heat Waves	No active business operations. ~~Owns~~Owned construction equipment used by Heat Waves. HE Services LLC was dissolved on December 23, 2020.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the disclosures required by generally accepted accounting principles in the United States of America ("GAAP") for complete financial statements. In the opinion of management, all ~~of the~~ normal and recurring adjustments necessary to fairly present the interim financial information set forth herein have been included. The results of operations for interim periods are not necessarily indicative of the expected operating results of a full year or of future years.

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with ~~generally accepted accounting principles in the United States of America (“GAAP”)~~GAAP and follow the same accounting policies and methods of their application as the most recent annual financial statements. These interim financial statements should be read in conjunction with the financial statements and related footnotes included in the Annual Report on Form 10-K of Enservco Corporation for the year ended December 31, ~~2019.~~2020. All ~~inter-company~~intercompany balances and transactions have been eliminated in the accompanying condensed consolidated financial statements.

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Note 2 -– Summary of Significant Accounting Policies

Going Concern

Our financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realization of assets and settlement of liabilities in the normal course of business. We incurred a net loss of $7.7 million for the year ended December 31, 2019 and have recorded net income of $8.4 million and $1.2 million for the three and nine months ended September 30, 2020, respectively. As of the balance sheet date of this report we had total current liabilities of $4.5 million, which exceeded our total current assets of $3.0 million by $1.5 million. On August 10, 2017, wethe Company entered into ~~the 2017 Credit~~a Loan and Security Agreement, as amended, with East West Bank (the ~~"2017~~"2017 Amended Credit Agreement") which ~~provides~~provided for a ~~three-year,~~three-year, $37.0 million senior secured revolving credit facility (the "Credit Facility"). On September 23, 2020, the Company and East West Bank entered into the Fifth Amendment to Loan and Security Agreement and Waiver (the "Fifth Amendment") which, among other things, provided for a loan concession of $16.0 million in exchange for ~~8,000,000~~533,334 shares of Company common stock and a five-year warrant to purchase up to ~~15,000,000~~1,000,000 additional shares of Company common stock in the ~~future. On August 13, 2020, the Company exchanged 50%, or $1.25 million, of our subordinated debt with a related party,~~future, as well as ~~$265,000 in accrued interest, for 6,054,022 of Company common stock.~~

~~The Fifth Amendment modifies certain covenants and cured our previous breaches of two covenants, as well as~~further extending the maturity date for the repayment of the Credit Facility to October 15, 2021. ~~Since~~On February 1, 2021, we entered into the ~~Fifth~~Sixth Amendment ~~cured~~to Loan and Security Agreement (the "Sixth Amendment") which extended the maturity date of the loan for an additional year to October 15, 2022, and modified certain covenants. The Seventh Amendment to the Credit Facility dated April 26, 2021 (the "Seventh Amendment") provided for amortization of the loan on a 10-year straight-line basis commencing on November 15, 2021 and continuing until maturity on October 15, 2022.

Subsequent to September 30, 2021, the Company determined that it would be in non-compliance of its trailing three-month revenue covenant under the Credit Facility for the month ended October 31, 2021, and would likely also be in non-compliance for the trailing three-month period ending November 30, 2021. This covenant requires the Company to achieve actual revenues in an amount not less than 70% of the revenue projections previously delivered by the Company (and accepted by East West Bank) for each trailing three-month period. The Company’s non-compliance with the covenant ~~breaches under~~resulted from October’s revenues being approximately $172,000 lower than what was required to meet the 2017 Credit Agreement, we are now in compliance with both our Credit Facility and subordinated debt agreements with a related party, and maturities of these debts were reclassified from current to long-term during the third quarter (see Note 7requirements of the ~~accompanying Notes~~covenant. The Company has determined that October’s lower revenues were the result of warmer than usual temperatures that have existed in the areas that the Company operates which caused the Company's frac water heating season to ~~the Condensed Consolidated Financial Statements).~~begin later than anticipated.

On November 12, 2021, we entered into the Eighth Amendment to Loan and Security Agreement with East West Bank (the "Eighth Amendment") which, among other things, provides for a waiver of default of the revenue covenant based upon our October trailing three-month period gross revenue and a reforecasting of our November and December revenues from what was previously provided to East West Bank. Per the Eighth Amendment, the revenue covenant utilizing October’s revenues is waived and will not be used in any future three-month period gross revenue covenant calculation. For the month ended November 30, 2021, covenant compliance will be measured at 80% of reforecast November revenues. Covenant compliance for the month ended December 31, 2021 will be measured at 80% of the reforecast November and December revenues. Beginning for the month ended January 31, 2022 and continuing until March 31, 2022, revenue covenant compliance will be measured at 80% of the trailing three months forecast gross revenues. Beginning the month ended April 30, 2022 and continuing through September ~~28, 2020,~~30, 2022, covenant compliance will be measured at 70% of the trailing three months forecasted gross revenues, except for the months ended April 30, 2022 and May 31, 2022, as those will include an 80% requirement for the months of February 2022 and March 2022. Upon execution of the Eighth Amendment, the Company ~~filed~~paid East West Bank a ~~prospectus supplement to finalize~~fee of $70,000 for the ~~S-3 (the "Shelf Registration") that was filed on July 24, 2020. On September 29, 2020, in connection with~~October revenue waiver and the Shelf Registration, the Company, through its sales agent Alliance Global Partners ("AGP"), released an at-the-market offering (the "Public Offering") which has been designed to raise capital by issuing approximately 15,000,000 securities into the trading market, over-time, at the then-market price of the securities at the time they are sold.Eight Amendment.

Our ~~ability to continue as a~~condensed consolidated financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realization of assets and settlement of liabilities in the normal course of business. For the three and nine months ended September 30, 2021, we incurred net losses of approximately $177,000 and $4.0 million, respectively. As of September 30, 2021, we had total current assets of $7.3 million and total current liabilities of $4.5 million, or working capital of $2.8 million.Although the Company has made substantial progress in improving its capitalization and financial position over the past twelve months, the current maturity date of the Credit Facility is ~~dependent on our ability to paydown and/or refinance the 2017 Credit Agreement prior to its maturity on~~ October 15, ~~2021, raising further capital and our ability to further reduce costs,~~2022. This maturity date of ~~which there can be no assurance. These factors raise~~the Credit Facility creates substantial doubt over our ability to continue as a going concern ~~and whether we will realize our assets and extinguish our liabilities in~~from one year after the ~~normal course~~date of ~~business and at the amounts stated in the financial statements. Given our current financial situation we may be required to accept onerous terms on the transactions that we are seeking.~~

~~Recent Market Conditions~~

~~The COVID-19 pandemic has significantly impacted the world economic conditions including in the United States, with significant effects beginning in February 2020, and continuing through the~~ issuance of this current report, ~~as federal, state~~or November 15, 2022. We continue to work with East West Bank on repayment strategies and ~~local governments react~~are working diligently to ~~the public health crisis, creating significant uncertainties relating to the United States economy. Consequently, the Company has experienced and expects to further experience~~secure a material adverse impact on its revenues, results of operations and cash flows. COVID-19 related quarantines and business restrictions had a depressing impact on United States oil demand, and hence our business, during the latter half of March through muchrefinancing of the second quarter. The situation continues to change rapidly and additional impacts to our business may arise that we are not aware of currently. We cannot predict whether, when or the manner in which the conditions surrounding COVID-19 will change including the timing of lifting any restrictions or office closure requirements.Credit Facility.

In addition, certain producing countries within the Organization of Petroleum Exporting Countries and their allies ("OPEC+") group attempted to increase market share through pricing activity that has had limited impact on the severe decline in domestic oil prices that occurred during the first quarter of 2020, and drilling and operating activity within our markets has remained depressed. There is no assurance that such efforts will not re-occur in the future.

The full extent of the impact of COVID-19 and OPEC+ actions on our operations and financial performance depends on future developments that are uncertain and unpredictable, including the duration and spread of the pandemic, its impact on capital and financial markets, any new information that may emerge concerning the severity of the virus, its spread to other regions as well as the actions taken to contain it, production response of domestic oil producers to lower oil prices, and the adherence to and continuity of OPEC+ production cuts, among others.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it invests. ~~The Company~~Enservco maintains its excess cash in ~~various~~one financial ~~institutions,~~institution, where deposits may exceed federally insured amounts at times.

Accounts Receivable

Accounts receivable are stated at the amounts billed to customers, net of an allowance for uncollectible accounts. The Company provides an allowance for uncollectible accounts based on a review of outstanding receivables, historical collection information and existing economic conditions. The allowance for uncollectible amounts is continually reviewed and adjusted to maintain the allowance at a level considered adequate to cover potential future losses. ~~The~~This allowance is management's best estimate of uncollectible amounts and is determined based on historical collection experience related to accounts receivable coupled with a review of the current status of existing receivables. The losses ultimately incurred could differ materially in the near term from the amounts estimated in determining ~~the~~this allowance. As of September 30, ~~2020,~~2021 and December 31, ~~2019,~~2020, the Company had an allowance for doubtful accounts of ~~approximately $544,000~~approximately $195,000 and ~~$246,000, respectively, an increase directly related to some of our customers in~~$322,000, respectively. For the ~~depressed oil market during that period. For t~~he three and nine months ended September 30, 2021, the Company recorded approximately $18,000 and $15,000, respectively, to bad debt recovery. For the three and nine months ended September 30, 2020, the ~~Compan~~yCompany recorded approximately $64,000 and $362,000, ~~to bad debt expense. For the three and nine months ended September 30, 2019, the Company recorded approximately $168,000 and $171,000~~respectively, to bad debt expense.

Inventories

~~Inventory consists~~Inventories consist primarily of propane, diesel fuel and chemicals that are used in the servicing of oil wells and isare carried at the lower of cost or net realizable value in accordance with the first in, first out method ~~(FIFO)~~of accounting ("FIFO"). The Company periodically reviews the value of items in ~~inventory~~inventories and provides write-downs or write-offs of ~~inventory~~inventories based on its assessment of market conditions. Write-downs and write-offs are charged to cost of goods sold. For the three and nine ~~months~~ months ended September 30,~~, 2020~~ 2021 and ~~2019,~~2020, the Company did not recognize any write-downs or write-offs of ~~inventory~~inventories.

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Property and Equipment

Property and equipment consists of (i) trucks, trailers and pickups; (ii) water transfer pumps, pipe, lay flat hose, trailers, and other support equipment; (iii) real property which includes land and buildings used for office and shop facilities and wells used for the disposal of water; (iv) other equipment such as tools used for maintaining and repairing ~~vehicles,~~vehicles; and (v) office furniture and fixtures, and computer equipment. Property and equipment is stated at cost less accumulated depreciation. The Company capitalizes interest on certain qualifying assets that are undergoing activities to prepare them for their intended use. Interest costs incurred during the fabrication period are capitalized and amortized over the life of the assets. The Company did not capitalize any interest for the three and nine months ended September 30, 2021 or 2020.The Company charges repairs and maintenance against income when incurred and capitalizes renewals and betterments which extend the remaining useful life or expand the capacity or efficiency of the assets. Depreciation is recorded on a straight-line basis over estimated useful lives of ranging from 5 to 30 years.

Any difference between the net book value of the property and equipment and the proceeds of an ~~assets’~~asset’s sale, or settlement of an insurance claim, is recorded as a gain or loss in the Company’s ~~earnings.~~condensed consolidated statements of operations.

Leases

The Company assesses whether an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. We have elected the practical expedient to not separate lease and non-lease components for all assets. Operating lease assets and operating lease liabilities are calculated based on the present value of the future minimum lease payments over the lease term at the lease start date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease start date in determining the present value of future lease payments. The operating lease asset is increased by any lease payments made at or before the lease start date and reduced by lease incentives and initial direct costs incurred. The lease term includes options to renew or terminate the lease when it is reasonably certain that we will exercise that option. The exercise of lease renewal options is at our sole discretion. The depreciable life of lease assets and leasehold improvements are limited by the lease term. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

The Company conducts a major part of its operations from leased facilities. Each of these leases is accounted for as an operating lease. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets.

The Company amortizes leasehold improvements over the shorter of the life of the lease or the life of the improvements.

The Company ~~has leased~~leases trucks and equipment in the normal course of business, which may be recorded as operating or ~~financing~~finance leases, depending on the term of the lease. The Company ~~recorded~~ records rental expense on equipment under operating leases over the lease term as it becomes payable; there ~~were~~ are norent escalation terms associated with these equipment leases. The Company records amortization expense on equipment under ~~financing~~finance leases on a straight-line basis, as well as interest expense based on our implicit borrowing rate at the date of the lease inception. The equipment leases contain purchase options that allow the Company to purchase the leased equipment at the end of the lease term, based on the market price of the equipment at the time of the lease termination.

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Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in ~~circumstances~~circumstances indicate that the carrying amount of the ~~assets~~asset may not be recovered. ~~During~~For the three and nine months ended September 30, 2021, the Company concluded that there were no triggering events which could indicate potential impairment of its long-lived assets. During the first quarter of 2020, the combination of the ~~COVID-19~~COVID-19 pandemic and actions taken by the Organization of Petroleum Exporting Countries and their allies ("OPEC+") countries caused oil and gas commodity demand to decrease significantly. The Company determined that these were triggering events which could indicate potential impairment of its long-lived assets. The Company reviewed both qualitative and quantitative aspects of the business during the analysis of potential impairment. During the quantitative review, the ~~Company~~Company reviewed the undiscounted future cash flows in its assessment of whether long-lived assets ~~were~~had been impaired. The Company ~~determined~~concluded that there was no0 impairment of its long-lived assets ~~during~~for the three ~~months~~ and nine months ended September 30, 2020. ~~During~~

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Assets Held for Sale

The Company classifies long-lived assets intended to be sold as held for sale in the ~~three~~period in which all of the following criteria are met: (1) management, having the authority to approve the action, commits to a plan to sell the asset or disposal group; (2) the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; (3) an active program to locate a buyer and other actions required to complete the plan to sell the asset or disposal group have been initiated; (4) the sale of the asset or disposal group is probable, and transfer of the asset or disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances beyond our control extend the period of time required to sell the asset or disposal group beyond one year; (5) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

We initially measure a long-lived asset or disposal group that is classified as held for sale at the lower of carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset or disposal group until the date of sale. We assess the fair value of a long-lived asset or disposal group less any costs to sell each reporting period it remains classified as held for sale and report any subsequent changes as an adjustment to the carrying value of the asset or disposal group, as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale. For the three and nine months ended September 30, ~~2019,~~2021 and 2020, the Company recorded 0 impairment charges ~~of approximately $0 and $127,000 related to~~on its ~~saltwater disposal wells. The Company divested the last saltwater disposal well during the second quarter of 2020.~~held for sale assets.

Upon determining that a long-lived asset or disposal group meets the criteria to be classified as held for sale, the Company ceases depreciation and reports long-lived assets and/or the assets and liabilities of the disposal group, if material, in the line item "Assets held for sale" in our condensed consolidated balance sheets.

Goodwill and Other Intangible Assets

Goodwill represents the excess purchase price over the fair value of identifiable assets received attributable to business acquisitions and combinations. Goodwill and other intangible assets are measured for impairment at least annually and/or whenever events and circumstances arise that indicate impairment may exist, such as a significant adverse change in the business climate. In assessing the value of goodwill, assets and liabilities are assigned to the reporting units and the appropriate valuation methodologies are used to determine fair value at the reporting unit level. Identified intangible assets are amortized using the straight-line method over their estimated useful lives.

For the three and nine months ended September 30, 2021, the Company concluded that there were no triggering events which could indicate potential impairment of its goodwill and other intangible assets. During ~~the~~ the first ~~nine months~~ quarter of 2020, the combination of the ~~COVID-19~~COVID-19 pandemic and actions taken by the OPEC+ countries caused oil and gas commodity demand to decrease significantly. The Company determined that these were triggering events ~~during the three months ended March 31, 2020,~~ which could indicate potential impairment of its goodwill and other intangible assets. The Company reviewed both qualitative and quantitative aspects of the business during the analysis of impairment. During the quantitative review, the Company ~~reviewed~~used both the ~~undiscounted~~fair value and discounted future cash flows in its assessment of whether goodwill and other intangible assets ~~were~~had been impaired. The Company concluded that there ~~were no further triggering events during the nine months ended September 30, 2020. Further, the Company determined that there~~ was no0 impairment of its goodwill and other intangible assets ~~during~~for the three ~~months~~ and nine months ended September 30, 2020.

Revenue Recognition

The Company evaluates revenue when we can identify the contract with the customer, the performance obligations in the contract, the transaction price, and we are certain that the performance obligations have been met. Revenue is recognized when the service has been provided to the customer. The vast majority of the Company's services and product offerings are short-term in nature. The time between invoicing and when payment is due under these arrangements is generally 30 to 60 days. Revenue is not generated from contractual arrangements that include multiple performance obligations.

The Company’s agreements with its customers are often referred to as ~~“price sheets”~~"price sheets" and sometimes provide pricing for multiple services. However, these agreements generally do not authorize the performance of specific services or provide for guaranteed throughput amounts. As customers are free to choose which services, if any, to use based on the Company’s price sheet, the Company prices its separate services on the basis of their standalone selling prices. Customer agreements generally do not provide for performance, cancellation, termination, or refund type provisions. Services based on price sheets with customers are generally performed under separately issued ~~“work orders”~~"work orders" or ~~“field tickets”~~"field tickets" as services are requested.

Revenue is recognized for certain projects that take more than one day as projects over time, based on the number of days during the reporting period and the agreed upon price as work progresses on each project.

Disaggregation of Revenue

See Note 1310 - Segment Reporting for disaggregation of revenue.

Employee Retention Credits

The Employee Retention Credits, a provision of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), was extended through December 31, 2021 through the American Rescue Plan Act. On November 15, 2021, the Infrastructure Investment and Jobs Act was signed into law and retroactively ends the Employee Retention Credits on September 30, 2021. For 2021, the Employee Retention Credits are up to $7,000 per employee per quarter on qualified wages for the firstthree quarters of 2021. During the second quarter of 2021, the Company amended payroll tax returns originally filed for the third and fourth quarters of 2020 in order to claim refundable Employee Retention Credits for those periods. For the three and nine months ended September 30, 2021, the Company recorded $612,000 and $2.1 million, respectively, to other income in the condensed consolidated statements of operations.

Earnings (Loss) Per Share

~~Earnings~~Basic earnings per ~~Common Share - Basic~~common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. ~~Earnings~~Diluted earnings per ~~Common Share - Diluted earnings~~common share is calculated by dividing net income (loss) by the diluted weighted average number of common ~~shares.~~shares outstanding for the period. The diluted weighted average number of common shares outstanding for the period is computed using the treasury stock method for Company common stock that may be issued for outstanding stock options, ~~and~~restricted stock or warrants.

As of September 30,~~30 of 2020~~2021 and ~~2019~~2020, there were outstanding stock options, ~~warrants and~~ unvested restricted stock awards and warrants to acquire an ~~aggregate~~ aggregate of ~~17,500,997~~1,376,239 and ~~4,011,499~~1,166,733 shares of Company common stock, respectively, which have a potentially dilutive impact on earnings per share. As of September 30, 2021 and 2020,~~these~~ the outstanding stock options and warrants ~~and unvested restricted stock awards~~ had no0 aggregate intrinsic value (the difference between the estimated fair value of the Company’s common stock on September 30, 2021 and , 2020,and the exercise price, multiplied by the number of in-the-money instruments). Dilution is not permitted if there are net losses during the period.

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~~Offering Costs~~Income Taxes

The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A - "Expenses of Offering". Offering costs consist principally of commissions and fees associated with the sale of the offered securities, as well as professional and other fees associated with the negotiation and filing of the Public Offering, that were incurred through the balance sheet date and were charged to stockholders' equity upon the completion and continuing sale of the Public Offering. As the securities are being offered into the market over-time by AGP, the Company will continue to incur commissions and fees associated with the sales until all of the securities in the Public Offering are sold into the market. At September 30, 2020 and December 31, 2019, offering costs totaling approximately $165,000 and $0, respectively, have been charged to stockholders' equity (deficit).

~~Derivative Instruments~~

~~From time to time, the Company has~~ interest rate swap agreements in place to hedge against changes in interest rates. The fair value of the Company’s derivative instrument is reflected as an asset or liability on the balance sheet. The accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative instrument and the resulting designation. Transactions related to the Company’s derivative instruments accounted for as hedges are classified in the same category as the item hedged in the consolidated statement of cash flows. The Company did ~~not~~ ~~hold derivative instruments at September~~ ~~30, 2020~~ or ~~December 31, 2019,~~ ~~for trading purposes.~~

On ~~February 23, 2018,~~ ~~we entered into an interest rate swap agreement with East West Bank in order to hedge against the variability in cash flows from future interest payments related to the~~ ~~2017~~ ~~Credit Agreement. The terms of the interest rate swap agreement included an initial notional amount of~~ ~~$10.0~~ ~~million, a fixed payment rate of~~ ~~2.52% paid by us and a floating payment rate equal to LIBOR paid by East West Bank.~~ The purpose of the swap agreement is to adjust the interest rate profile of our debt obligations. The fair value of the interest rate swap agreement is recorded in other liabilities as of December 31, 2019, and changes to the fair value are recorded to other income (expense). The swap agreement matured during the second quarter of 2020, the balance was adjusted to $0 and a $23,000 gain was recorded to other income.

~~Income Taxes~~

The Company recognizes deferred tax liabilities and assets based on the differences between the tax basis of assets and liabilities and their reported amounts in the condensed consolidated financial statements that will result in taxable or deductible amounts in future years. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities will be recognized in income in the period that includes the enactment date. A deferred tax asset or liability that is not related to an asset or liability for financial reporting is classified according to the expected reversal date. The Company records a valuation allowance to reduce deferred tax assets to an amount that it believes is more likely than not expected to be realized.

The Company accounts for any uncertainty in income taxes by recognizing the tax benefit from an uncertain tax position only if, in the Company’s opinion, it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized in the financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, the Company is required to make many subjective assumptions and judgments regarding income tax exposures. Interpretations of and guidance surrounding income tax law and regulations change over time and may result in changes to the Company’s subjective assumptions and judgments which can materially affect amounts recognized in the condensed consolidated balance sheets and condensed consolidated statements of ~~income.~~operations. The result of the reassessment of the Company’s tax positions did not have an impact on the condensed consolidated financial statements.

Interest and penalties associated with tax positions are recorded in the period assessed as ~~other expense.~~"Other expense" in the condensed consolidated statements of operations. The Company files income tax returns in the United States of America ("USA") and in the states in which it conducts its business operations. The Company’s ~~United States~~USA federal income tax filings for tax years ~~2016~~2017 through ~~2019~~2020 remain open to examination. In general, the Company’s various state tax filings remain open for tax years ~~2015~~2016 to ~~2019.~~2020.

In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. These measures may include deferring the due dates of tax payments or other changes to their income and non-income-based tax laws. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws. For the three and nine months ended September 30, 2020, there were no material tax impacts to our condensed consolidated financial statements relating to COVID-19 measures. We continue to monitor additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service, and others.

Fair Value

The Company follows authoritative guidance that applies to all financial assets and liabilities required to be measured and reported on a fair value basis. The Company also applies the guidance to non-financial assets and liabilities measured at fair value on a nonrecurring basis, including non-competition agreements and goodwill. The guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability ~~(an~~ ("exit ~~price)~~price") in an orderly transaction between market participants at the measurement date. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available.

Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. Beginning in 2017 the Company valued its warrants using the Binomial Lattice model ("("Lattice"). Specific inputs used in the Lattice are the underlying stock price, the exercise price of the warrant, expected dividends, historical volatility, term to expiration and risk-free interest rates. The Company did not have any transfers between hierarchy levels ~~during~~for the three and nine ~~months~~ months ended September 30, ~~2020~~2021. . The financial and ~~nonfinancial~~non-financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

The hierarchy is broken down into three levels based on the reliability of the inputs as follows:

Level 1:

~~Level~~ 1:Quoted prices are available in active markets for identical assets or liabilities;

~~Quoted prices are available in active markets for identical assets or liabilities;~~

Level 2:

Quoted prices in active markets for similar assets and liabilities that are observable for the asset or liability; or

Level 3:

Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash flow models or valuations.

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~~Stock-Based~~Stock-based Compensation

Stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the award as described below, and is recognized over the requisite service period, which is generally the vesting period of the equity grant.

The Company uses the Black-Scholes pricing model as a method for determining the estimated grant date fair value for all stock options awarded to employees, independent contractors, officers, and directors. The expected term of the options is based upon evaluation of historical and expected exercise behavior. The risk-free interest rate is based upon ~~U.S.~~USA Treasury rates at the date of grant with maturity dates approximately equal to the expected life of the grant. Volatility is determined upon historical volatility of our stock and adjusted if future volatility is expected to vary from historical experience. The dividend yield is assumed to be ~~none~~zero as we have not historically paid dividends, nor do we anticipate paying any dividends in the foreseeable future.

The Company uses a Lattice model to determine the fair value of certain warrants. The expected term used was the remaining contractual term. Expected volatility is based upon historical volatility over a term consistent with the remaining term. The risk-free interest rate is derived from the yield on zero-coupon ~~U.S.~~USA government securities with a remaining term equal to the contractual term of the warrants. The dividend yield is assumed to be zero.

The Company used the market-value of Company common stock to determine the fair value of the performance-based restricted stock awarded in 2018 and 2019. ~~The fair-value~~ Stock-based compensation is updated quarterly based on actual forfeitures.

The Company used either a ~~lattice~~Lattice model or the Black-Scholes pricing model to determine the fair value of market-based restricted stock awarded in ~~2020~~2021 and ~~2019.~~2020.

Management Estimates

The preparation of the Company’s condensed consolidated financial statements in conformity with ~~accounting principles generally accepted in the United States of America~~GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the realization of accounts receivable, evaluation of impairment of long-lived assets, stock-based compensation expense, income tax ~~provision, the valuation of warrant liability and the Company's interest rate swaps, undiscounted future cash flow projections~~provisions and the valuation of deferred taxes. Actual results could differ from those estimates.

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Reclassifications

Certain prior-period amounts have been reclassified for comparative purposes to conform to the current presentation. These reclassifications have no effect on the Company’s condensed consolidated statements of operations.

~~Related Parties~~
~~From time-to-time, the Company enters into other transactions and agreements with certain related parties for various professional services.~~
The restructuring of the Credit Facility through the Fifth Amendment, pursuant to which the Company issued 8,000,000 shares of common stock and one warrant to acquire up to 15,000,000 shares of common stock to East West Bank on September 23, 2020, resulted in East West Bank becoming a related party given that its beneficial ownership exceeds 5% of the Company's outstanding common stock. See Note 7 - Debt for additional information regarding the restructuring of the Credit Facility.
On August 13, 2020, the Company, upon receiving approval from the Company's Board of Directors, agreed to exchange 50%, or $1.25 million, of our subordinated debt with Cross River Partners, L.P., a related party, as well as $265,000 in accrued interest, for 6,054,022 of Company common stock. The discount that the Company received was recorded to additional paid-in capital.
~~Business Combinations~~
We recognize and measure the assets acquired and liabilities assumed in a business combination based on their estimated fair values at the acquisition date, with any remaining difference recorded as goodwill or gain from a bargain purchase. For material acquisitions, management typically engages an independent valuation specialist to assist with the determination of fair value of the assets acquired, liabilities assumed, noncontrolling interest, if any, and goodwill, based on recognized business valuation methodologies. If the initial accounting for the business combination is incomplete by the end of the reporting period in which the acquisition occurs, an estimate will be recorded. Subsequent to the acquisition, and not later than one year from the acquisition date, we will record any material adjustments to the initial estimate based on new information obtained about facts and circumstances that existed as of the acquisition date. An income, market or cost valuation method may be utilized to estimate the fair value of the assets acquired, liabilities assumed, and noncontrolling interest, if any, in a business combination. The income valuation method represents the present value of future cash flows over the life of the asset using: (i) discrete financial forecasts, which rely on management’s estimates of volumes, commodity prices, revenue and operating expenses; (ii) long-term growth rates; and (iii) appropriate discount rates. The market valuation method uses prices paid for a reasonably similar asset by other purchasers in the market, with adjustments relating to any differences between the assets. The cost valuation method is based on the replacement cost of a comparable asset at prices at the time of the acquisition reduced for depreciation of the asset. See Note 4 – Business Combinations~~for additional information regarding our business combinations.~~
~~Recently Adopted~~ Accounting Pronouncements

In June 2016, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ~~ASU 2016-13,~~Accounting Standards Update ("ASU") 2016-13, Financial Statements - Credit Losses (Topic ~~326)~~326): Measurement of Credit Losses on Financial Instruments, which requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a broader range of reasonable and supportable information to ascertain credit loss estimates. The standard is effective for fiscal years beginning after December 15, 2022. The Company does not expect the adoption of ASU ~~2016-13~~2016-13 to have a material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, and improves consistent application by clarifying and amending existing guidance. The Company adopted ASU 2019-12 on January 1, 2021, and the adoption of this guidance did not have a material impact on the Company's consolidated financial statements.
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Note 3 -– Property and Equipment

Property and equipment consist of the following (in thousands):

September 30,

December 31,

2020

2019

Trucks and vehicles
$ 58,070 $ 59,788
Other equipment
1,318 1,303
Buildings and improvements
3,176 3,184
Land
378 378
Total property and equipment
62,942 64,653
Accumulated depreciation
(40,352 ) (38,033 )
Property and equipment, net
$ 22,590 $ 26,620

~~Note 4 – Business Combinations~~

September 30, 2021

December 31, 2020

Trucks and vehicles
$ 57,076 $ 57,224
Other equipment
1,961 1,319
Buildings and improvements
3,203 3,176
Land
378 378
Total property and equipment
62,618 62,097
Accumulated depreciation
(45,548 ) (41,780 )
Property and equipment, net
$ 17,070 $ 20,317

~~Acquisition~~For the three and nine months ended September 30, 2021, the Company recorded depreciation expense of ~~Adler Hot Oil Service, LLC~~
On October 26, 2018, Enservco Corporation entered into a Membership Interest Purchase Agreement (the “Agreement”) with Adler Hot Oil Holdings, LLC, a Delaware limited liability company (the “Seller”), pursuant to which Enservco acquired allapproximately $1.2 million and $3.8 million, respectively. For the three and nine months ended September 30, 2020, the Company recorded depreciation expense of ~~the outstanding membership interests of Adler Hot Oil Service, LLC, a Delaware limited liability company (“Adler”) for a gross aggregate purchase price of $12.5~~approximately $1.2 million plus approximately $500,000 in working capital adjustments (the “Transaction”). The purchase price allocation differs from the gross aggregate purchase price due to fair value adjustments to the indemnity holdback, earnout, plus the discount on the subordinated note. Certain former members of Adler are also parties to the Agreement. Adler is a provider of frac water heating and ~~hot oiling services, whose assets consist primarily of vehicles and equipment, with a complementary base of customers in several oil and gas producing basins where Enservco operates.~~
~~The consideration paid or to be paid by Enservco under the Agreement originally included: (i)~~ $3.7 million, in cash paid to or for the benefit of the Seller at the closing; (ii) a subordinated promissory note issued to the Seller in the principal amount of $4.8 million, plus interest accrued thereon (the “Seller Subordinated Note”), as further discussed below; (iii) retirement by Enservco of $2.5 million in indebtedness of Adler; (iv) an earn-out payment of up to $1.0 million in cash payable to the Seller (the "Earn-Out Payment"), the actual amount of which is subject to Enservco’s satisfaction of certain EBITDA-related performance conditions during 2019; and (v) $1.0 million in cash held by Enservco and payable to the Seller on April 26, 2020, subject to offset by Enservco for any indemnification obligations owed by the Seller or certain former members of Adler under the Agreement (the "Indemnity Holdback Payment"). Certain aspects of the consideration have been modified since execution of the Agreement as further discussed below. respectively.
On April 4, 2019 Enservco and the Seller entered into a Settlement Agreement and Mutual Release (the “Settlement Agreement”) in order to resolve certain disputes and disagreements relating to the Transaction. Pursuant to the Settlement Agreement the parties agreed to (i) waive all rights of the Seller to the Earn-Out Payment and the Indemnity Holdback Payment, (ii) reduce the original principal balance of the Seller Subordinated Note from $4,800,000 to $4,500,000, (iii) extend the maturity date of the Seller Subordinated Note from March 31, 2019 to April 10, 2019, subject to a nine-day grace period, and (iv) execute a mutual release. All adjustments to the original purchase accounting were recognized in the second quarter of 2019, when the settlement occurred. We also considered whether the execution of the Settlement Agreement was an indicator of impairment regarding the recorded balance of goodwill and the definite-lived intangible assets. With regard to goodwill, we determined that it was not more likely than not that the carrying amount of the reporting unit was greater than its fair value, and thus determined that further evaluation of goodwill for potential impairment was not necessary. We perform a goodwill impairment analysis over the recorded balance on an annual basis, or if we determine an indicator of impairment exists.With regard to the definite-lived intangible assets, we determined that there were no events or changes in circumstances that would indicate that its carrying amount may not be recoverable, and therefore determined that a test for recoverability was not required.
The acquisition of Adler qualified as a business combination and as such, we estimated the fair value of the assets acquired and liabilities assumed as of the closing date. Additionally, we estimated the fair value of contingent consideration given. The fair value measure of the assets acquired, and liabilities assumed applied various valuation methods to estimate the value of the intangibles that would provide a fair and reasonable value to a market participant, in view of the facts available at the time. Each valuation method was analyzed to determine which method would generate the most reasonable estimate of value of the Company’s intangible assets as of October 26, 2018. Both internal and external factors influencing the value of the intangibles were considered such as Adler’s financial position, results of operations, historical financial data, future financial expectations, economic conditions, status of the oil and gas industry and Adler’s position in the industry.
In connection with the execution of the Settlement Agreement, we reviewed our estimates and allocation of the fair value of assets acquired, consideration transferred, and contingent consideration given in connection with the Transaction. In our judgment, the reduction in the fair value of the consideration did not have a clear and direct link to the purchase price, and therefore the change in the fair value of the Indemnity Holdback Payment of approximately $908,000, the change in the fair value of the Earn-Out Payment, of approximately $44,000, and the $300,000 reduction in the amount of the Seller Subordinated Note, were each recorded as gains within Other Income (Expense) in the accompanying Statements of Operations during 2019.
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The goodwill of approximately $245,000 arising from the acquisition consists largely of the synergies expected be achieved from combining the operations of Enservco and Adler. None of the goodwill is expected to be deductible for income tax purposes.
~~The following tables represent the consideration paid to the Seller and the estimated fair value of the assets acquired and liabilities assumed.~~
Consideration paid to Seller:

Cash consideration, including payment to retire Adler debt

$
6,206

Subordinated note, net of discount

4,580

Indemnity holdback at fair value

873

Earnout at fair value

44

Net purchase price

$
11,703

Recognized amounts of identifiable assets acquired and liabilities assumed:

Cash

$
43

Accounts receivable, net

1,317

Prepaid expenses and other current assets

239

Property, plant, and equipment

9,664

Intangible assets

1,045

Accounts payable and accrued liabilities

(850
)
Total identifiable net assets

11,458

Goodwill

245

Total identifiable assets acquired

$
11,703

~~Subordinated Note~~
In connection with the Transaction and pursuant to the terms of the Agreement, on October 26, 2018, Enservco issued to the Seller the Seller Subordinated Note in the original principal amount of $4.8 million, which was reduced to $4.5 million as discussed above, and unpaid amounts thereunder incurred simple interest at a rate of 8% per annum. Enservco was required to and made principal payments on November 30, 2018 of $800,000, on February 28, 2019 of $200,000, and additional payments during April 2019 totaling $3.5 million. The Seller Subordinated Note was guaranteed by Enservco’s subsidiaries and secured by a junior security interest in substantially all assets of Enservco and its subsidiaries. The Seller Subordinated Note was subject to a subordination agreement by and among Enservco, the Seller, and East West Bank. On April 19, 2019, Enservco made the final payment to settle the principal balance and accrued interest on the Seller Subordinated Note and Enservco has no further obligations to the Seller.
~~Second Amendment to Loan and Security Agreement and Consent~~
In connection with the Transaction, on October 26, 2018, Enservco and East West Bank entered into a Second Amendment to Loan and Security Agreement and Consent (the “Second Amendment to LSA”), which amended the Loan and Security Agreement dated August 10, 2017 by and between Enservco and East West Bank (the “Loan Agreement”). Pursuant to the Second Amendment to LSA, East West Bank consented to the Transaction and increased the maximum borrowing limit of the senior secured revolving credit facility provided to Enservco under the Loan Agreement to $37.0 million. Proceeds of $6.2 million from the increased senior secured revolving credit facility were used in the Transaction to make the cash payments at closing and retire the indebtedness of Adler. In connection with the Second Amendment to LSA the capital expenditure limitation contained within the Loan Agreement was increased to $3.0 million from $2.5 million.
~~On October 26, 2018, in connection with the Second Amendment to LSA, Adler entered into a Joinder Agreement, pursuant to which Adler was joined as a party to the Loan Agreement.~~
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Note 5 4– Intangible Assets

The components of our intangible assets ~~consist of the following~~are as follows (in thousands):

	September 30, 2020			December 31, 2019			September 30, 2021			December 31, 2020
Customer relationships	$	626		$	626		$	626		$	626
Patents and trademarks		441			441			441			441
Total intangible assets		1,067			1,067			1,067			1,067
Accumulated amortization		(395	)		(239	)		(613	)		(450	)
Net carrying value	$	672		$	828		$	454		$	617

The useful lives of our intangible assets are estimated to be five years. ~~Amortization~~For the three and nine months ended September 30, 2021, amortization expense was approximately $54,000 and $163,000, respectively. For the three and nine months ended September 30, 2020, amortization expense was approximately $54,000 and $156,000, ~~for the three and nine months ended September 30, 2020. Amortization expense was approximately $51,000 and $154,000 for the three and nine months ended September 30, 2019.~~respectively.

The following table represents the amortization expense for the next five years for the twelve months ending September 30 ~~(in~~(in thousands):

2021

2022

2023

2024

Customer relationships

$
125

$
125

$
125

$
10

Patents and trademarks

93

93

93 8

Total intangible asset amortization expense

$
218

$
218

$
218

$
18

~~Note 6 – Discontinued Operations~~

~~Heat Waves Water Management~~

During December 2019, the Heat Waves Water Management business ceased operations. The decision to discontinue HWWM was made due to its history of net losses, declining revenues, and its failure to generate positive operating cash flow. In early 2020, the Company began disposing of the HWWM assets and plans on selling off the remaining HWWM assets during the fourth quarter of 2020. HWWM was previously reported in the Water Transfer Services segment, however, the Company redefined its segments during the year ended December 31, 2019, and Water Management Services is no longer a reporting segment.

~~Dillco~~

Effective November 1, 2018, the Dillco water hauling business ceased operations for customers. In December 2018, we held an auction for all of the Dillco fixed assets which resulted in a gain of approximately $129,000. Additionally, we recorded an impairment charge of $130,000 related to land and building sold subsequent to December 31, 2018.

~~The following table represents a reconciliation of the carrying amounts of major classes of assets and liabilities disclosed as discontinued operations in the Balance Sheets:~~

2022

2023

2024

2025

2026

Customer relationships
$ 125 $ 125 $ 10 $ 0 $ 0
Patents and trademarks
93 93 8 0 0
Total intangible asset amortization expense
$ 218 $ 218 $ 18 $ 0 $ 0

September 30,

December 31,

2020

2019

Carrying amount of major classes of assets included as part of discontinued operations:

Accounts receivable, net
$ - $ 175
Property and equipment, net
771 1,373
Prepaid expenses and other current assets
- 12
Right-of-use asset - financing, net 38 57
Total major classes of assets of the discontinued operations
$ 809 $ 1,617

Carrying amounts of major classes of liabilities included as part of discontinued operations:

Accounts payable and accrued liabilities
6 47
Lease liabilities - financing (current and non-current portions) 40 59
Total liabilities included as part of discontinued operations
$ 46 $ 106

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The following table represents a reconciliation of the major classes of line items constituting pretax loss of discontinued operations that are disclosed as discontinued operations in the Statements of Operations: Note 5 – Debt

Three months ended

September 30,

2020

2019

Revenue
$ - $ 899
Cost of sales
- (828
)
Sales, general, and administrative expenses
- (11
)
Depreciation and amortization
(6
)
(300
)
Other income and expense items that are not major
(1
)
-
Pretax loss of discontinued operations related to major classes of pretax profit
(7 ) (240
)
Gain on disposal of assets - 14
Total loss on discontinued operations that is presented in the Statements of Operations
$ (7 ) $ (226
)
Nine months ended

September 30,

2020

2019

Revenue
$ - 3,194
Cost of sales
(11 ) (4,298
)
Sales, general, and administrative expenses
- (29
)
Depreciation and amortization
(19
)
(877
)
Other income and expense items that are not major
(2
)
6
Pretax loss of discontinued operations related to major classes of pretax profit
(32 ) (2,004
)
Gain (loss) on disposal of assets 92 (2 )
Total income (loss) on discontinued operations that is presented in the Statements of Operations
$ 60 $ (2,006
)
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~~Note 7~~ ~~– Debt~~
East West Bank Revolving Credit Facility

On August 10, 2017, the Company entered into the 2017 Amended Credit Agreement with East West Bank. The 2017 Amended Credit Agreement ~~(as defined in Note 2 of the accompanying Notes to the Condensed Consolidated Financial Statements)~~ originally allowed us to borrow up to 85% of our eligible receivables and up to 85% of the appraised value of our eligible equipment. The Fifth Amendment entered into on September 23, 2020 restructured the loan ~~and provides for a loan forgiveness of~~by exchanging $16.0 million of the loan into the Company's equity and ~~converts~~converting the remaining principal balance to a $17.0 million equipment term loan and a revolver to provide the Company with a maximum ~~$1,000,000~~$1.0 million line of credit. ~~There are~~The Sixth Amendment effective noJanuary 1, 2021 ~~required principal payments~~further extended the maturity date and modified the financial covenants effective January 1, 2021. The Seventh Amendment to the Credit Facility dated April 26, 2021 (the "Seventh Amendment") provided for amortization of the loan on a 10-year straight-line basis commencing on November 15, 2021 and continuing until maturity on October 15, ~~2021, and interest~~2022. Interest on the Credit Facility is fixed at 8.25%. Interest on the first 5.25% is calculated monthly and paid in arrears, while the remaining 3.00% is accrued to the loan balance through October 15, 2022, and due with all remaining outstanding principal on the maturity date. Additionally, the Credit Facility is subject to an unused credit line fee of 0.5% per annum multiplied by the amount by which total availability exceeds the average monthly balance of the Credit Facility, payable monthly in arrears. The Credit Facility is collateralized by substantially all our assets and subject to financial covenants.

Under the ~~Fifth Amendment, the Fixed Charge Coverage Ratio has been waived.~~
As of September 30, 2020, we had an outstanding principal loan balance under the Credit Facility of approximately $17.3 million with a weighted average interest rates of 8.25% per year. As of September 30, 2020, our availability under the amended 2017 Credit Agreement was approximately $0.7 million. The Credit Facility balance of $18.9 million at September 30, 2020 includes $1.6 million of future interest payable due over the remaining term of the Credit Facility in accordance with ASC 470-60, Troubled Debt Restructuring by Debtors.
~~Under the amended~~ 2017 Amended Credit Agreement, we are subject to the following financial ~~covenants:~~
covenants, with which we were in compliance as of September 30, 2021:

(1) ~~Beginning on~~ On December 31, 2020, we ~~are~~were required to maintain liquidity of not less than $1.5 million; and

(2) For each trailing three-month period, commencing with the three-month period ending March 31, 2021, we are required to achieve gross revenue of at least seventy percent (70%) of our projected gross revenue; and

(3) We are limited to a capital expenditures cap of $1.2 million for any fiscal year that the loan remains outstanding.

On February 11, 2021, the Company made a $3.0 million payment of principal on the equipment term loan. As of September 30, 2021, we had an outstanding principal loan balance under the Credit Facility of approximately $14.0 million with a weighted average interest rate of 8.25% per year. As of September 30, 2021, our availability under the 2017 Amended Credit Agreement was $1.0 million. The Credit Facility balance of $14.8 million as of September 30, 2021 includes approximately $792,000 of future interest payable due over the remaining term of the Credit Facility in accordance with Accounting Standards Codification ("ASC") 470-60, Troubled Debt Restructuring by Debtors.

Subsequent to September 30, 2021, the Company determined that it would be in non-compliance of its trailing three-month revenue covenant under the Credit Facility for the month ended October 31, 2021, and would likely also be in non-compliance for the trailing three-month period ending November 30, 2021. This covenant requires the Company to achieve actual revenues in an amount not less than 70% of the revenue projections previously delivered by the Company (and accepted by East West Bank) for each trailing three-month period. The Company’s non-compliance with the covenant resulted from October’s revenues being approximately $172,000 lower than what was required to meet the requirements of the covenant. The Company has determined that October’s lower revenues were the result of warmer than usual temperatures that have existed in the areas that the Company operates which caused the Company's frac water heating season to begin later than anticipated.

On November 12, 2021, we entered into the Eighth Amendment to Loan and Security Agreement with East West Bank which, among other things, provides for a waiver of default of the revenue covenant based upon our October trailing three-month period gross revenue and a reforecasting of our November and December revenues from what was previously provided to East West Bank. Per the Eighth Amendment, the revenue covenant utilizing October’s revenues is waived and will not be used in any future three-month period gross revenue covenant calculation. For the month ended November 30, 2021, covenant compliance will be measured at 80% of reforecast November revenues. Covenant compliance for the month ended December 31, 2021 will be measured at 80% of the reforecast November and December revenues. Beginning for the month ended January 31, 2022 and continuing until March 31, 2022, revenue covenant compliance will be measured at 80% of the trailing three months forecasted gross revenues. Beginning the month ended April 30, 2022 and continuing through September 30, 2022, covenant compliance will be measured at 70% of the trailing three months forecasted gross revenues, except for the months ended April 30, 2022 and May 31, 2022, as those will include an 80% requirement for the months of February 2022 and March 2022. Upon execution of the Eighth Amendment, the Company paid East West Bank a fee of $70,000 for the October revenue waiver and the Eight Amendment.

In connection with amending the 2017 Amended Credit Agreement on September 23, 2020, the Company issued to East West Bank ~~8,000,000~~533,334 shares of Company common stock and a ~~five-year~~five-year warrant to purchase up to ~~15,000,000~~1,000,000 additional shares of Company common stock at an exercise price of ~~$0.25~~$3.75 per share. The ~~8,000,000~~533,334 shares of Company common stock ~~was~~were valued at a price of ~~$0.1385~~$2.0775 per share, or a total value of $1.1 million. The ~~8,000,000~~533,334 common shares issued to East West Bank ~~cannot~~could not be sold or transferred prior to March 23, 2021. The warrant for ~~15,000,000~~1,000,000 shares is exercisable beginning September 23, 2021 until September 23, 2025. The fair value of the warrant was determined to be $1.4 million and ~~were~~was recorded in ~~additional~~"Additional paid-in ~~capital.~~capital" in the condensed consolidated balance sheets. The Company recorded a total gain on the debt restructuring of $11.9 million ~~for both~~during the ~~three and nine months ended September 30,~~ third quarter of 2020, which iswas calculated by subtracting from the ~~$16.0~~$16.0 million loan forgiveness, a) the future interest payable on the Credit Facility; b) the value of the Company common stock issued; and c) the fair value of the warrant. ~~The per share effect of the gain on both basic and diluted earnings per common share was $0.20 and $0.21 for the three and nine months ended September 30, 2020, respectively.~~

Debt Issuance Costs

~~Debt Issuance Costs~~

We capitalized certain debt issuance costs incurred in connection with the Credit Facility discussed above and these costs ~~are being~~were amortized to interest expense over the term of the facility on a straight-line ~~basis, which approximates the effective interest rate. The long-term portion of~~basis. There were 0 remaining unamortized debt issuance costs as of ~~approximately $0~~ September 30, 2021 and ~~$82,000~~December 31, 2020. For the three ~~is included in Other Assets in the accompanying condensed consolidated balance sheets for~~and nine months ended September 30, 2020, ~~and~~ ~~December 31, 2019,~~ ~~respectively. During the~~ ~~three and nine~~ ~~months ended September~~ ~~30, 2020~~,the Company amortized approximately $12,000 and $82,000, respectively, of these costs to ~~interest expense. During~~"Interest expense" in the ~~three and nine~~ ~~months ended September~~ ~~30, 2019~~, ~~the Company amortized approximately $35,000 and $104,000, respectively,~~condensed consolidated statements of ~~these costs to interest expense. As of September 30, 2020, these costs have been fully amortized.~~operations.

Paycheck Protection Program

On April 10, 2020, the Company entered into a promissory note (the ~~“Note”~~"Note" or "PPP Loan") with East West Bank in the aggregate amount of $1,939,900, pursuant to the Paycheck Protection Program (the ~~“PPP”~~"PPP") under Division A, Title I of the ~~Coronavirus Aid, Relief, and Economic Security~~CARES Act, ~~("CARES Act"),~~ which was enacted March 27, 2020, and is administered by the ~~United States~~USA Small Business Administration ("SBA").

The Note matures on April 10, 2022 and bears interest at a rate of 1.00% per annum, payable in full plus all accrued interest on April 10, 2022. The Note is carried at its full value in long-term debt, net of current portion. The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties. Funds received under the Note may only be used for the Company’s payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The Company intends to use the entire Note proceeds for qualifying expenses. Under the terms of the PPP, amounts of the Note may be forgiven if they are used for qualifying expenses as described in the CARES Act. Any amount forgiven will be recorded in other income (expense).

On November 9, 2020, the Company submitted the initial loan forgiveness application to East West Bank for review and approval. ~~East West Bank has sixty days from~~ On July 8, 2021, the ~~receipt~~SBA approved our loan forgiveness application in full, which includes forgiveness of the ~~application to complete their review process, render a recommendation on~~total principal balance of approximately $1.9 million, as well as approximately $24,000 in accrued interest. The total amount forgiven was approximately $2.0 million and was recorded in "Other income (expense)" in the ~~amount~~condensed consolidated statements of ~~loan forgiveness~~operations for the three and ~~then to send the application to the SBA for final approval. The Company does not expect to receive approval on the application of loan forgiveness from the SBA until the first or second quarter of~~ nine months ended September 30, 2021.

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Notes Payable

Long-term debt ~~(excluding borrowings under our Credit Facility described above)~~ consists of the following (in thousands):

September 30,

December 31,

2020

2019

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

Subordinated Promissory Note with related party. Interest is at 10% and is paid quarterly. Matures June 28, 2022 500 1,000

Subordinated Promissory Note with related party. Interest is at 10% and is paid quarterly. Matures June 28, 2022 500 1,000

Subordinated Promissory Note with related party. Interest is at 10% and is paid quarterly. Matures June 28, 2022 250 500

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, 2028. Collateralized by land and property purchased with the loan.
180 218

Vehicle loans for three pickups, interest at 8.59% monthly principal and interest payments of $3,966, matures in August 2021 42 74

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 53
Total
3,426 2,845
Less debt discount (82 ) (119 )
Less current portion
(110 ) (2,528 )
Long-term debt, net of debt discount and current portion
$ 3,234 $ 198

September 30, 2021

December 31, 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. Amortization of the loan on a 10-year straight-line basis will commence on November 15, 2021. Matures October 15, 2022. $ 14,792 $ 19,078
Paycheck Protection Loan. Interest is at 1% with payments deferred until October 10, 2020. Matures April 10, 2022. Loan and accrued interest forgiven in full on July 8, 2021. 0 1,940
Subordinated Promissory Note with related party. Interest at 10% and paid quarterly. Balance converted to equity in February 2021. 0 1,250
Real Estate Loan for a facility in North Dakota. Interest is at 5.75% with monthly principal and interest payment of $5,255 until October 3, 2023. Collateralized by land and property purchased with the loan.
126 167
Vehicle loans for three pickups. Interest at 8.59% with monthly principal and interest payments of $3,966. Loans paid in full in June 2021. 0 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. Loan paid in full in June 2021. 0 14
Total long-term debt
14,918 22,480
Less debt discount 0 (70 )
Less current portion
(2,057 ) (1,693 )
Long-term debt, net of debt discount and current portion
$ 12,861 $ 20,717

Aggregate maturities of debt ~~(excluding the~~ ~~2017~~ ~~Credit Agreement described above),~~ are as follows (in thousands):

Twelve Months Ending September 30,

2021
$ 110
For the twelve months ending September 30,

2022
3,247 $ 2,057
2023
61 12,853
2024
8
8

2025
-
Thereafter
-
Total
$ 3,426 $ 14,918

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Table of Contents

Note 86 ~~– Fair Value Measurements~~

~~The following table presents the Company~~’s financial assets and liabilities that were accounted for at fair value on a recurring basis by level within the fair value hierarchy (in thousands). The interest rate swap is valued at zero because it matured during the second quarter of 2020.

Fair Value Measurement Using

Quoted
Prices in
Active Markets (Level 1)

Significant Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Fair Value
Measurement

September 30, 2020

Derivative Instrument

Interest rate swap liability $ - $ - $ - $ -

December 31, 2019

Derivative Instrument

Interest rate swap liability
$ - $ 23 $ - $ 23
The fair value of the interest rate swap is estimated using a discounted cash flow model. Such models involve using market-based observable inputs, including interest rate curves. We incorporate credit valuation adjustments to appropriately reflect both our nonperformance risk and respective counterparty’s nonperformance risk in the fair value measurements, which we have concluded are ~~not~~ ~~material to the valuation. Due to the interest rate swaps being unique and~~ ~~not~~ ~~actively traded, the fair value is classified as Level~~ 2.
~~Certain assets and liabilities are measured at fair value on a nonrecurring basis. These assets and liabilities are~~ ~~not~~ ~~measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. As of~~ ~~September 30, 2020,~~ ~~and~~ ~~December 31, 2019,~~ the carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, and interest approximates fair value due to the short-term nature of such items. The carrying value of the Company’s credit agreements are carried at cost which are approximately the fair value of the debt as the related interest rate are at the terms that approximate rates currently available to the Company.
~~The Company did~~ ~~not~~ ~~have any transfers of assets or liabilities between Level~~ 1, ~~Level~~ 2 ~~or Level~~ 3 ~~of the fair value measurement hierarchy during the~~ ~~three~~ ~~and nine months ended September~~ ~~30, 2020~~.
~~Note 9~~– – Income Taxes

Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period.  The provision for income taxes for the three and nine months ended September 30,~~, 2020~~ 2021 and ~~2019~~2020 differs from the amount that would be provided by applying the statutory ~~U.S.~~USA federal income tax rate of 21%21% to ~~pre-tax~~pre-tax income primarily because of state income taxes and estimated permanent differences.

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in various jurisdictions, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the current year.  The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known, or as the tax environment changes.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management recorded a valuation allowance to reduce its net deferred tax assets to zero.

~~During~~For the nine months ended September 30, ~~2020~~ 2021 and ~~2019,~~2020, the Company's tax provisions of ~~$15,000~~$0 and ~~$32,000,~~$15,000, respectively, were adjusted by the valuation allowance which resulted in a net tax provision of zero.

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Note 107– Commitments and Contingencies

~~Operating Leases~~
On January 1, 2019, we adopted ASC 842, Leases. Results for reporting periods beginning January 1, 2019 are presented in accordance with ASC 842, while prior period amounts are reported in accordance with ASC 840. On January 1, 2019, we recognized $2.4 million in right-of-use assets and $2.4 million in lease liabilities, representing the present value of minimum payment obligations associated with leased facilities and certain equipment with non-cancellable lease terms in excess of one year. We recognized approximately $845,000 in right-of-use assets and lease liabilities. We made a cumulative-effect adjustment to retained earnings of approximately $98,000 at January 1, 2019.
Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company uses the weighted average interest rate on its Credit Facility. Long-term leases typically contain rent escalations over the lease term. The Company recognizes expense for these leases on a straight-line basis over the lease term.
The Company has elected the short-term lease recognition exemption for all applicable classes of underlying assets. Short-term disclosures include only those leases with a term greater than one month and 12 months or less, and expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the balance sheet.
~~The Company elected the expedient to account for lease and non-lease components as a single component for our entire population of operating lease assets.~~
As of September 30, ~~30, 2020,~~ 2021,the Company leases facilities and certain equipment under lease commitments that expire through June2026.Future minimum lease ~~commitments~~payments for these operating and finance lease commitments are as follows (in thousands):

Twelve Months Ending September 30,
Operating Leases Financing Leases
2021
$ 960 $ 100

Operating Leases Finance Leases
For the twelve months ending September 30,
2022
859 62 $ 859 $ 28
2023
637 14 637 14
2024
548 14 548 12
2025
352 3 352 1
Thereafter
269 -

3,625 193
2026
269 0
Total future lease payments 2,665 55
Impact of discounting (383 ) (57 ) (259 ) (3 )
Discounted value of lease obligations $ 3,242 $ 136 $ 2,406 $ 52

17

Table of Contents
The following table summarizes the components of our gross operating and finance lease costs incurred for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

For the Three Months Ended
For the Nine Months Ended

2020

2019

2020

2019
September 30, September 30,
Operating lease expense:
2021 2020 2021 2020
Operating lease cost:

Current lease cost
$ 8 $ 321 $ 51 $ 642 $ 24 $ 8 $ 57 $ 51
Long-term lease cost 256 194 835 387 256 256 768 835
Total operating lease cost
$ 264 $ 515 $ 886 $ 1,029 $ 280 $ 264 $ 825 $ 886

Finance lease expense:

Finance lease cost:
Amortization of right-of-use assets
$ 25 $ 76 $ 145 $ 144 $ 7 $ 25 $ 54 $ 145
Interest on lease liabilities
2 8 14 17 1 2 5 14
Total lease cost
$ 27 $ 84 $ 159 $ 161
Total finance lease cost
$ 8 $ 27 $ 59 $ 159

Our weighted-average lease term and discount rate used ~~during~~for the nine months ended September 30, ~~2020~~ 2021 and ~~2019~~2020 are as follows:

Nine Months Ended June 30,
2020 2019
Operating
Weighted-average lease term (years)
4.26 4.85
Weighted-average discount rate
6.08 % 6.08
%
Financing
Weighted-average lease term (years) 2.26 2.41
Weighted-average discount rate 5.95 % 6.10 %
19
~~Table of Contents~~
For the Nine Months Ended
September 30,
2021 2020
Operating:
Weighted-average lease term (years)
3.57 4.26
Weighted-average discount rate
6.09 % 6.08 %

Finance:
Weighted-average lease term (years) 2.36 2.26
Weighted-average discount rate 5.72 % 5.95 %

Self-Insurance

In June 2015, the Company became self-insured under its Employee Group Medical Plan, and currently is responsible to pay the first~~$50,000~~ $50,000 in medical costs per individual participant for claims incurred in the calendar year, up to a maximum of approximately $1.8 million per year in the aggregate based on enrollment. The Company had an accrued liability of ~~approximately $119,000~~ approximately $95,000and ~~$68,000~~$150,000 as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, for insurance claims that it anticipates paying in the future related to claims that occurred prior to ~~September 30, 2020 and~~ December 31, ~~2019, respectively.~~2020. Effective January 1, 2021, the Company moved onto a traditional Employee Group Medical Plan and was no longer self-insured for claims occurring after that date.

Effective April 1, 2015, the ~~Company~~Company had entered into a workers’ compensation and employer’s liability insurance policy with a term through March 31, 2018. Under the terms of the policy, the Company was required to pay premiums in addition to a portion of the cost of any claims made by our employees, up to a maximum of approximately $1.8 million over the term of the policy (an amount that was variable with changes in annualized compensation amounts). As of ~~June~~ September 30, ~~2020,~~2021, a former employee of ours had an open claim relating to injuries sustained while in the course of employment, and the projected maximum cost of the policy, as determined by the insurance carrier, included estimated claim costs that have not yet been paid or incurred in connection with the claim. ~~During~~For the year ended December 31, 2017, our insurance carrier formally denied the workers' compensation claim and has moved to close the claim entirely. Per the terms of our insurance policy, through September 30, ~~2020,~~ 2021, we had paid in approximately $1.8 million of the projected maximum plan cost of $1.8 million and had recorded approximately $1.6 million as expense over the term of the policy. ~~We recorded~~In September 2020, the claim was officially denied by the Kansas Division of Workers Compensation Judicial Unit. As of September 30, 2021, no appeal has been made and the Company expects to collect the remaining ~~approximately~~ $189,000 ~~in payments made under~~on deposit with the policy as a long-term asset, which we expect will either be recorded as expense in future periods, or refunded to us by the insurance carrier, depending on the outcome of the individual claim described above, and the final cost of any additional open claims incurred under the policy. As of September 30, 2020, we believe we have paid all amounts contractually due under the policy.underwriter. Effective April 1, 2018, we entered into a new workers’ compensation policy with a fixed premium amount determined annually, and therefore are no longer partially self-insured for workers' compensation and employer's liability.

Litigation

~~Enservco and~~On November 8, 2021, Amanda Mordica, a Texas resident, filed a complaint in Texas State Court in Atascosa County, against the Company, its wholly owned subsidiary, Heat Waves ~~were defendants in a civil lawsuit in federal court in Colorado, Civil Action No. 1:15-cv-00983-RBJ (“Colorado Case”), that alleged that Enservco~~Hot Oil Service, LLC, and ~~Heat Waves, in offering and selling frac water heating services, infringed and induced others to infringe~~ two ~~patents owned~~ individual former Company employees alleging negligence by Heat-On-The-Fly, LLC (“HOTF”)- U.S. Patent No. 8,171,993 (the "'993 Patent") and U.S. Patent No. 8,739,875 (the "'875 Patent"). In March of 2019, the parties moved to dismiss the Colorado Case. On March 15, 2019, the Colorado Case was dismissed in its entirety without any finding of wrongdoing by Enservco or Heat Waves.
While the Colorado Case was pending, HOTF was issued two additional patents, which were related to the '993 and '875 Patents, but were not asserted in the Colorado Case. However, on March 31, 2015, the U.S. District Court for the District of North Dakota (Civil Action No. 4:13-cv-00010) ruled, in a case not involving Enservco or Heat waves, that the '993 Patent was invalid. On January 14, 2016, the court ruled that the ‘993 Patent was also unenforceable due to inequitable conduct by HOTF and the inventor. HOTF appealed, and on May 4, 2018, the United States Court of Appeals for the Federal Circuit (Case No. 16-1894) upheld the lower court's ruling of unenforceability. In light of the foregoing, Management believes that the inequitable conduct related to the '993 Patent could serve as a basis for asserting unenforceability of the two additional patents.
~~Note~~ 11~~– Stockholders~~~~’ Equity~~
~~Warrants~~
In ~~June 2016,~~ the Company ~~granted a principal of the Company’s investor relations firm warrants to acquire~~ ~~30,000~~ ~~shares of the Company’s common stock~~and its subsidiary in connection with a ~~reduction~~traffic accident sustained by Ms. Mordica on November 19, 2019. Ms. Mordica’s claim is in excess of $1.0 million. The Company has tendered this litigation to its insurer who has preliminarily indicated that they have accepted coverage. As such, the Company does not believe that this litigation will have a materially adverse impact on the Company.
18

Table of Contents
Note 8– Stockholders’ Equity
Conversion of Subordinated Debt to Equity
On August 13, 2020, the Company's Board of Directors approved a transaction to exchange 50%, or $1.25 million, of our subordinated debt with Cross River, a related party, as well as $265,000 in accrued interest, for 403,602 shares of Company common stock. The total Company common stock fair value consideration was $963,000 and the Company recognized a gain of $552,000 in the condensed consolidated statements of stockholders’ equity.
In a separate transaction on February 11, 2021, the Company exchanged the remaining 50%, or $1.25 million, of our subordinated debt with Cross River, as well as $62,000 in accrued interest, for 601,674 shares of Company common stock, which was based on the price of Company common stock at market close on the date of the ~~firm's ongoing monthly cash service fees.~~conversion. In addition, the Company awarded a warrant to Cross River to purchase up to 150,418 shares of the Company's common stock at an exercise price of $2.507 per share. The warrants had a grant-date fair value of ~~$0.36~~$2.02 per share and ~~vested over a~~ are exercisable beginning one-year ~~period,~~ ~~15,000~~from the issuance date on ~~December 21, 2016~~February 11, 2022 until February 11, 2026. The total fair value of the warrant and ~~15,000~~loss on ~~June 21, 2017.~~ Asextinguishment of ~~September~~ ~~30, 2020~~, ~~all of these warrants remain outstanding and are exercisable until June 21, 2021 at $0.70 per share.~~the subordinated debt with this related party was $304,000, which was immaterial to the Company's condensed consolidated financial statements.
Warrants

On November 11, 2019, in connection with a subordinated loan agreement, the Company granted Cross River one ~~five-year~~five-year warrant to buy an aggregate total of ~~625,000~~41,667 shares of the Company's common stock at an exercise price of ~~$0.20~~$3.00 per share. The warrants had a grant-date fair value ~~$0.16~~$2.40 and were fully vested upon issuance and remain outstanding and exercisable until November 11, 2024.

On September 23, 2020, in connection with the Fifth Amendment, the Company granted East West Bank one ~~five-year~~five-year warrant to buy an aggregate total of ~~15,000,000~~1,000,000 shares of the Company's common stock at an exercise price of ~~$0.25~~$3.75 per share. The warrants had a grant-date fair value ~~$0.09 and~~of $1.42, were fully vested upon issuance and remain outstanding and are exercisable beginning ~~one-year~~one-year from the issuance date on September 23, 2021 ~~and~~ until September 23, 2025.
On February 11, 2021, in connection with the conversion of the subordinated loan agreement to Company common stock, the Company granted Cross River onefive-year warrant to buy an aggregate total of 150,418 shares of the Company's common stock at an exercise price of $2.507 per share. The warrants had a grant-date fair value $2.02 and are exercisable beginning one-year from the issuance date on February 11, 2022 until February 11, 2026.
Each grant of warrants granted to Cross River was reviewed and approved by the independent directors of the Company.
On April 12, 2021, the Securities and Exchange Commission ("SEC") issued a Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies ("SPACs") (the "Staff Statement"). The SEC highlighted accounting considerations which could, in certain circumstances, indicate that warrants should be accounted for as liabilities rather than equity instruments, in which case the warrants would be subject to fair value adjustments during each reporting period. Although the Staff Statement focused on SPACs, the same accounting considerations may apply to warrants issued by non-SPAC entities. Upon issuance of the Staff Statement, the Company performed further analysis on its population of warrants, which are listed above, giving consideration to the areas of concern noted in the Staff Statement. Upon this further review of its warrant agreements, the Company determined that it has correctly accounted for its warrants as equity instruments.

2019
Table of Contents
A summary of warrant activity for the ninemonths ended September 30, ~~2020~~2021 is as follows ~~(amounts in~~(in thousands):

Weighted

Weighted

Average

Average

Remaining

Aggregate

Exercise

Contractual

Intrinsic

Warrants

Shares

Price

Life (Years)

Value

Outstanding at December 31, 2019
655,000 $ 0.22 4.7 $ -
Issued
15,000,000 0.25 5.0 -
Exercised
- - - -
Forfeited/Cancelled
- - - -
Outstanding at September 30, 2020
15,655,000 $ 0.25 4.9 $ -

Exercisable at September 30, 2020
655,000 $ 0.22 4.0 $ -
~~Stock Issued for Services~~
~~During the~~ ~~three and nine~~ ~~months ended September~~ ~~30, 2020~~, ~~respectively, the Company did~~ ~~not~~ ~~issue any shares of common stock as compensation for services provided to the Company.~~
~~Board Approval of Reverse Stock Spilt~~
On June 26, 2020, upon approval from shareholders at the Company's annual meeting of the stockholders, the Company is authorized to a reverse stock split of the Company's shares of common stock issued and outstanding, or reserved for issuance, at an exchange ratio of not greater than 25-to-1 and not less than 10-to-1. Both the timing, if any, and the exchange ratio, are to be determined at the sole discretion of the Company's Board of Directors. On November 3, 2020, the Company's Board of Directors approved a reverse split at a ratio of 15-to-1. This reverse split is expected to be effective on November 20, 2020.

Weighted Average

Weighted Average

Remaining

Warrants

Shares

Exercise Price

Contractual Life (Years)

Outstanding as of December 31, 2020
1,043,667 $ 3.73 4.7
Issued
150,418 2.51 4.0
Expired (2,000 ) 10.50 -
Outstanding as of September 30, 2021
1,192,085 $ 3.57 4.0

Exercisable as of September 30, 2021
1,041,667 $ 3.72 3.9

Note 129– Stock Options and Restricted Stock

Stock Options

On July 27, 2010, the Company’s Board of Directors adopted the 2010 Stock Incentive Plan (the “"2010 ~~Plan”~~Plan"). The aggregate number of shares of Company common stock that could be granted under the 2010 Plan was reset at the beginning of each year based on 15% of the number of shares of Company common stock then outstanding. As such, on January 1, 2016, the number of shares of Company common stock available under the 2010 Plan was reset to ~~5,719,069~~381,272 shares based upon ~~38,127,129~~2,541,809 shares outstanding on that date. Options were typically granted with an exercise price equal to the estimated fair value of the Company's common stock at the date of grant with a vesting schedule of one to three years and a contractual term of 5 years. As discussed below, the 2010 Plan has been replaced by a new stock option plan and no0 additional stock option grants will be granted under the 2010 Plan. As of September 30, ~~2020,~~2021, there were nooptions ~~to purchase 116,166 shares outstanding~~available for issuance under the 2010 Plan.

On July 18, 2016, the Board of Directors unanimously approved the adoption of the Enservco Corporation 2016 Stock Incentive Plan (the “"2016 ~~Plan”~~Plan"), which was approved by the stockholders on September 29, 2016. The aggregate number of shares of Company common stock that may be granted under the 2016 Plan is ~~8,000,000~~533,334 shares plus authorized and unissued shares from the 2010 Plan totaling ~~2,391,711~~159,448, for a total reserve of ~~10,391,711~~692,782 shares. As of September 30, ~~30,~~~~2020,~~2021, there were outstanding options to purchase ~~1,357,333~~2,934 shares and we had granted restricted stock shares of ~~372,498~~ 181,221 shares of restricted stock that remained outstanding under the 2016 Plan.

~~We have~~For the ~~not~~nine ~~granted any stock options during the three and nine~~ months ended September 30, 2021 and 2020, or t~~he three and nine~~ ~~months ended September 30,~~ ~~2019.~~
~~During the nine months ended September 30~~~~, 2020 and 2019,~~no0 options were granted or exercised.

Shares

Weighted Average
Exercise Price

Weighted Average
Remaining
Contractual Term
(Years)

Aggregate Intrinsic
Value (in thousands)

Outstanding at December 31, 2019
1,945,333 $ 0.55 1.95 $ -
Granted
- - - -
Exercised
- - - -
Forfeited or Expired
(471,834 ) 1.31 - -
Outstanding at September 30, 2020
1,473,499 $ 0.31 1.57 $ -

Vested or Expected to Vest at September 30, 2020
1,473,499 $ 0.31 1.57 $ -
Exercisable at September 30, 2020
1,473,499 $ 0.31 1.57 $ -
20

Table of Contents
The following is a summary of stock option activity for all equity plans for the nine months ended September 30, 2021:

Shares

Weighted Average
Exercise Price

Weighted Average
Remaining
Contractual Term (Years)

Outstanding as of December 31, 2020
11,569 $ 5.87 0.53
Forfeited or expired
(8,635 ) 5.98 -
Outstanding as of September 30, 2021
2,934 $ 5.55 0.35

Vested as of September 30, 2021
2,934 $ 5.55 0.35
Exercisable as of September 30, 2021
2,934 $ 5.55 0.35

~~The~~There was 0 aggregate ~~intrinsic value in the table above represents the total~~ intrinsic value (the difference between the estimated fair value of the Company’s common stock on September 30,~~, 2020,~~ 2021, and the exercise price, multiplied by the number of in-the-money options) ~~that would have been received by the option holders had they exercised their options on September 30~~~~, 2020.~~of our outstanding options.

~~During~~For the three and ninemonths ended September 30, ~~2020~~,2021, the ~~Company~~Company recognized 0 stock-based compensation costs for stock ~~options of approximately $0 and $3,000~~options. For the ,three ~~respectively, in sales, general, and administrative expenses. During~~months ended September 30, 2020, the Company recognized 0 stock-based compensation costs for stock options. For the ~~three and~~ ninemonths ended September 30, ~~2019~~,2020, the Company recognized stock-based compensation costs for stock options of approximately $3,000 ~~and~~ ~~$74,000,~~ ~~respectively,~~ in ~~sales,~~"Sales, general, and administrative ~~expenses.~~ ~~The Company currently expects all outstanding options to vest. Compensation cost is revised if subsequent information indicates that~~expenses" in the ~~actual number~~condensed consolidated statements of ~~options vested due to service is likely to differ from previous estimates.~~ operations.

21
~~Table of Contents~~
~~A summary of the status of non-vested shares underlying the options are presented below:~~

Number of Shares

Weighted-Average Grant-
Date Fair Value

Non-vested at December 31, 2019
53,001 $ 0.22
Granted
- -
Vested
(26,334 ) 0.22
Forfeited
(26,667 ) 1.92
Non-vested at September 30, 2020
- $ -
As of September 30, ~~2020,~~2021, there was no0 remaining unrecognized compensation costs related to non-vested shares under the ~~Company’s~~Company's stock option plans.

21

Table of Contents
Restricted Stock

Restricted shares issued pursuant to restricted stock awards under the 2016 Stock Plan are restricted as to sale or disposition. These restrictions lapse periodically, generally over a period of three years. Restrictions may also lapse for early retirement and other conditions in accordance with our established policies. Upon termination of employment, shares on which restrictions have not lapsed must be returned to us, resulting in restricted stock forfeitures. The fair market value on the date of the grant of the stock with a service condition is amortized and charged to income on a straight-line basis over the requisite service period for the entire award. The fair market value on the date of the grant of the stock with a performance condition shall be accrued and recognized when it becomes probable that the performance condition will be achieved. Restricted shares that contain a market condition are amortized and charged over the life of the award.

A summary of the restricted stock activity is presented below:

Number of Shares

Weighted-Average Grant-
Date Fair Value

Number of Shares

Weighted Average
Grant Date Fair Value

Restricted shares at December 31, 2019
2,006,333 $ 0.55
Restricted shares as of December 31, 2020
24,393 $ 7.32
Granted
150,000 0.17 165,000 1.05
Vested
(1,043,334 ) 0.44 (6,505 ) 7.94
Forfeited
(740,501 ) 0.54 (1,667 ) 8.92
Restricted shares at September 30, 2020
372,498 $ 0.49
Restricted shares as of September 30, 2021
181,221 $ 1.58

~~During~~For the three and nine months ended September 30, 2021, the Company recognized stock-based compensation costs for restricted stock of approximately $21,000 and $70,000, respectively, in "Sales, general, and administrative expenses" in the condensed consolidated statements of operations. For the three and nine months ended September 30, 2020, the Company recognized stock-based compensation costs for restricted stock of approximately $16,000 and $374,000, respectively, in ~~sales,~~"Sales, general, and administrative ~~expenses,~~expenses" in the condensed consolidated statements of which $0 and $301,000 for the three and nine months ended September 30, 2020, respectively, was related to severance compensation in connection with a separation agreement with the Company's former CEO during the second quarter of 2020. In addition, of the 1,043,334 shares that vested during the first nine months of 2020, 895,000 shares were related to the former CEO's separation agreement, as were 100,000 of the 150,000 shares that were granted during the same period. ~~During the three and nine months ended September 30, 2019, the Company recognized~~ ~~stock-based compensation costs for restricted stock of approximately $50,000 and $147,000~~ ~~in sales, general, and administrative expenses.~~operations. Compensation cost is revised if subsequent information indicates that the actual number of restricted ~~shares~~stock vested due to service is likely to differ from previous estimates.

The following table sets forth the weighted average outstanding of potentially dilutive ~~instruments:~~ instruments for the three and nine months ended September 30, 2021 and 2020:

For the Three Months Ended For the Nine Months Ended

Three Months Ended September 30,

Nine Months Ended September 30,
September 30, September 30,

2020

2019

2020

2019
2021 2020 2021 2020
Stock options
1,482,347 1,973,862 1,602,073 2,211,863 2,934 98,823 4,201 106,805
Restricted stock 406,058 2,083,389 1,043,034 1,317,686 181,550 27,071 178,720 69,523
Warrants
1,796,304 30,000 1,038,212 30,000 1,192,085 119,754 1,170,204 69,214
Weighted average
3,684,709 4,087,251 3,683,319 3,559,549 1,376,569 245,648 1,353,125 245,542
On January 4, 2021, the Company awarded Company common stock to members of its Board of Directors with an award date fair value of approximately $311,000 based on the closing price of the Company's stock reported on the NYSE American on the date of the award. As of December 31, 2020, the Company accrued Board of Directors fees of approximately $221,000 for services rendered from October 2019 through December 2020. For the nine months ended September 30, 2021, the Company issued 118,184 shares to settle the outstanding accrual. For the nine months ended September 30, 2021, the Company awarded 48,129 restricted shares for 2021 Board of Directors fees and has recognized expense of approximately $68,000 related to the award of these shares. The Company will expense the remaining $22,000 related to the award of these shares during the fourth quarter of 2021.

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Note 1310–- Segment Reporting

~~In 2019 we reorganized our business segments to align with how the oil and gas industry and our management team evaluates the business.~~ Enservco’s reportable ~~business~~operating segments are Production Services and Completion and Other Services. These segments have been selected based on management’s resource allocation and performance assessment in making decisions regarding the Company.
The following is a description of the segments.

Production Services:
This segment utilizes a fleet of hot ~~oil~~oiling trucks and acidizing units to provide maintenance services to the domestic oil and gas industry. These services include hot ~~oil~~oiling services and acidizing services. Hot oiling is utilized by customers to remove paraffins from wellbores, pipes and vessels. Acidizing services are utilized by customers to clean reservoir surfaces and increase flow rates.

Completion and Other Services:
This segment utilizes a fleet of frac water heating units to provide frac water heating services and related support services to the domestic oil and gas industry. These services also include other services for other industries, which consist primarily of hauling and transport of materials and heat treating for customers. Frac water heating is utilized by customers during the completion of oil and gas wells.

Unallocated ~~and other~~
This segment includes general overhead expenses and assets associated with managing all reportable operating segments which have not been allocated to a specific segment.

The following tables set forth certain financial information with respect to Enservco’s reportable segments (in thousands):

Production
Services

Completion
Services

Unallocated &
Other

Total

Three Months Ended September 30, 2020:

Revenues
$ 1,363 $ 401 $ - $ 1,764
Cost of Revenue
1,347 1,126 - 2,473
Segment Profit (Loss)
$ 16 $ (725 ) $ - $ (709 )

Depreciation and Amortization
$ 496 $ 655 $ 120 $ 1,271

Capital Expenditures (Excluding Acquisitions)
$ 11 $ 28 $ - $ 38

Identifiable assets ⁽¹⁾ $ 13,042 $ 13,444 $ 1,047 $ 27,533

Three Months Ended September 30, 2019:

Revenues
$ 3,288 $ 510 $ - $ 3,798
Cost of Revenue
3,305 1,710 - $ 5,015
Segment Loss
$ (17 ) $ (1,200 ) $ - $ (1,217 )

Depreciation and Amortization
$ 673 $ 706 $ 25 $ 1,404

Capital Expenditures (Excluding Acquisitions)
$ 149 $ 156 $ 249 $ 554

Identifiable assets⁽¹⁾ $ 16,876 $ 17,687 $ 1,450 $ 36,013

Production
Services

Completion and Other
Services

Unallocated

Total

For the Three Months Ended September 30, 2021:

Revenues
$ 2,483 $ 544 $ 0 $ 3,027
Cost of revenue
2,489 1,189 0 3,678
Segment loss
$ (6 ) $ (645 ) $ 0 $ (651 )

Depreciation and amortization
$ 639 $ 562 $ 101 $ 1,302
Capital expenditures
$ 77 $ 68 $ 8 $ 153
Identifiable assets⁽¹⁾ $ 11,906 $ 10,460 $ 614 $ 22,980

For the Three Months Ended September 30, 2020:

Revenues
$ 1,363 $ 401 $ 0 $ 1,764
Cost of revenue
1,347 1,126 0 $ 2,473
Segment profit (loss)
$ 16 $ (725 ) $ 0 $ (709 )

Depreciation and amortization
$ 496 $ 655 $ 120 $ 1,271
Capital expenditures
$ 11 $ 28 $ 0 $ 39
Identifiable assets ⁽¹⁾
$ 13,042 $ 13,444 $ 1,047 $ 27,533

(1)
Identifiable assets is calculated by summing the balances of accounts receivable, net; inventories; property and equipment, net; net right-of-use lease assets; assets held for sale; and other assets.

Production
Services

Completion
Services

Unallocated &
Other

Total

Nine Months Ended September 30, 2020:

Revenues
$ 5,948 $ 7,343 $ - $ 13,291
Cost of Revenue
6,655 7,613 - 14,268
Segment (Loss) Profit
$ (707
)
$ (270 ) $ - $ (977 )

Depreciation and Amortization
$ 1,813 $ 1,869 $ 295 $ 3,977

Capital Expenditures (Excluding Acquisitions)
$ 170 $ 175 $ - $ 344

Nine Months Ended September 30, 2019:

Revenues
$ 11,239 $ 23,711 $ - $ 34,950
Cost of Revenue
9,994 16,829 - $ 26,823
Segment Profit
$ 1,245 $ 6,882 $ - $ 8,127

Depreciation and Amortization
$ 2,156 $ 1,982 $ 108 $ 4,246

Capital Expenditures (Excluding Acquisitions)
$ 267 $ 292 $ 287 $ 846

Production
Services

Completion and Other
Services

Unallocated

Total

For the Nine Months Ended September 30, 2021:

Revenues
$ 6,556 $ 4,701 $ 0 $ 11,257
Cost of revenue
6,802 5,680 0 12,482
Segment loss
$ (246
)
$ (979 ) $ 0 $ (1,225 )

Depreciation and amortization
$ 1,739 $ 1,935 $ 301 $ 3,975
Capital expenditures
$ 166 $ 174 $ 8 $ 348
Identifiable assets⁽¹⁾
$ 11,906 $ 10,460 $ 614 $ 22,980

For the Nine Months Ended September 30, 2020:

Revenues
$ 5,948 $ 7,343 $ 0 $ 13,291
Cost of revenue
6,655 7,613 0 $ 14,268
Segment loss
$ (707
)
$ (270 ) 0 $ (977 )

Depreciation and amortization
$ 1,813 $ 1,869 $ 295 $ 3,977
Capital expenditures
$ 170 $ 174 $ 0 $ 344
Identifiable assets⁽¹⁾
$ 13,042 $ 13,444 $ 1,047 $ 27,533
(1)
Identifiable assets is calculated by summing the balances of accounts receivable, net; inventories; property and equipment, net; net right-of-use lease assets; assets held for sale; and other assets.

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The following table reconciles the segment ~~profits~~losses reported above to the ~~income~~loss from operations reported in the condensed consolidated statements of operations (in thousands):

Three Months Ended September 30,

2020

2019

Segment profit
$ (709 ) $ (1,217 )
Sales, general, and administrative expenses
(1,049
)
(1,712
)
Patent litigation and defense costs
- -

Severance and Transition Costs - (83 )
Loss on disposals of equipment (21 ) -
Impairment - -
Depreciation and amortization
(1,271
)
(1,404
)
Loss from Operations
$ (3,050
)
$ (4,416 )

For the Three Months Ended

September 30,

2021

2020

Segment loss
$ (651 ) $ (709 )
Sales, general, and administrative expenses
(907 ) (1,049 )
Loss on disposal of equipment 0 (21 )
Depreciation and amortization
(1,302 ) (1,271 )
Loss from operations
$ (2,860 ) $ (3,050 )

Nine Months Ended September 30,

2020

2019

Segment profit
$ (977 ) $ 8,127
Sales, general, and administrative expenses
(4,058
)
(4,772
)
Patent litigation and defense costs
- (10
)
Severance and Transition Costs (139 ) (83)
(Loss) gain on disposals of equipment (59 ) 4
Impairment - (127 )
Depreciation and amortization
(3,977
)
(4,246
)
Loss from Operations
$ (9,210
)
$ (1,107 )

For the Nine Months Ended

September 30,

2021

2020

Segment loss
$ (1,225 ) $ (977 )
Sales, general, and administrative expenses
(2,904 ) (4,058 )
Severance and transition costs - (139 )
Loss on disposal of equipment
(70 ) (59 )
Depreciation and amortization
(3,975 ) (3,977 )
Loss from operations
$ (8,174 ) $ (9,210 )

Geographic Areas

The Company only ~~does~~conducts business in the ~~United States,~~USA, in what it believes are three geographically diverse regions. The following ~~table sets~~tables set forth revenue from operations for the Company’s three geographic regions ~~(amounts in~~(in thousands):

For the Three Months Ended

Three Months Ended September 30,
September 30,

2020

2019

2021

2020

BY GEOGRAPHY

Production Services:
Rocky Mountain Region ⁽¹⁾
$ 539 $ 1,330 $ 676 $ 539
Central USA Region ⁽²⁾
746 1,862 1,651 746
Eastern USA Region ⁽³⁾
78 96 156 78
Total Production Services 1,363 3,288 2,483 1,363

Completion Services:
Completion and Other Services:
Rocky Mountain Region ⁽¹⁾ 375 325 435 375
Central USA Region ⁽²⁾ - 131 38 0
Eastern USA Region ⁽³⁾ 26 54 71 26
Total Completion Services 401 510
Total Completion and Other Services 544 401

Total Revenues
$ 1,764 $ 3,798 $ 3,027 $ 1,764

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Nine Months Ended September 30,

2020

2019

BY GEOGRAPHY

Production Services:
Rocky Mountain Region ⁽¹⁾
$ 2,080 $ 5,174
Central USA Region ⁽²⁾
3,562 5,489
Eastern USA Region ⁽³⁾
306 576
Total Production Services 5,948 11,239

Completion Services:
Rocky Mountain Region ⁽¹⁾ 6,092 17,468
Central USA Region ⁽²⁾ 108 2,976
Eastern USA Region ⁽³⁾ 1,143 3,267
Total Completion Services 7,343 23,711
Total Revenues
$ 13,291 $ 34,950

For the Nine Months Ended

September 30,

2021

2020

BY GEOGRAPHY

Production Services:

Rocky Mountain Region⁽¹⁾
$ 1,708 $ 2,080
Central USA Region⁽²⁾
4,304 3,562
Eastern USA Region⁽³⁾
544 306
Total Production Services
6,556 5,948

Completion and Other Services:

Rocky Mountain Region⁽¹⁾
3,142 6,092
Central USA Region⁽²⁾
38 108
Eastern USA Region⁽³⁾
1,521 1,143
Total Completion and Other Services
4,701 7,343

Total Revenues
$ 11,257 $ 13,291

Notes to tables:

(1)
Includes the ~~D-J~~DJ Basin/Niobrara field (northeastern Colorado and southeastern Wyoming), the San Juan Basin (southeastern Colorado and northeastern New ~~Mexico, the Powder River and Green River Basins (northeastern and southwestern Wyoming)~~Mexico), the ~~Bakken area (western North Dakota~~Powder River and Green River Basins (northeastern and southwestern Wyoming), the Bakken area (western North Dakota and eastern Montana).

(2)
Includes the ~~Scoop/Stack Shale in Oklahoma and the~~ Eagle Ford Shale in ~~Texas.~~Southern Texas and the East Texas Oil Field beginning during the second quarter of 2021.

(3)
Consists of the southern region of the ~~southern region of~~Marcellus Shale formation (southwestern Pennsylvania and northern West Virginia) and the ~~Marcellus~~Utica Shale formation ~~(southwestern Pennsylvania and northern West Virginia) and the Utica Shale formation~~ (eastern Ohio).

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Table of Contents

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion provides information regarding the results of operations for the three and nine months ended September 30, 2021 and 2020, ~~and 2019, and~~as well as our financial condition, liquidity and capital resources as of September 30, ~~2020,~~2021 and December 31, ~~2019.~~2020. The condensed consolidated financial statements and ~~the~~ notes thereto contain detailed information that should be referred to in conjunction with this discussion.

Cautionary Note Regarding Forward-Looking Statements

The information discussed in this Quarterly Report on Form 10-Q ("Quarterly Report") includes ~~“forward-looking statements”~~"forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 (the ~~“Securities Act”~~"Securities Act") and Section 21E of the Securities Exchange Act of 1934 (the ~~“Exchange Act”~~"Exchange Act"). All statements, other than statements of historical facts, included herein concerning, among other things, planned capital expenditures, future cash flows and borrowings, pursuit of potential acquisition opportunities, our financial position, business strategy and other plans and objectives for future operations, are forward-looking statements. These forward-looking statements are identified by their use of terms and phrases such as “may,” “expect,” “estimate,” “project,” “plan,” “believe,” “intend,” “achievable,” “anticipate,” “will,” “continue,” “potential,” “should,” “could,”"may," "expect," "estimate," "project," "plan," "believe," "intend," "achievable," "anticipate," "will," "continue," "potential," "should," "could," and similar terms and phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties. Our results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, among others:

●
Our ability to maintain certain operating covenants under our existing 2017 Amended Credit Agreement which, if violated and not cured by us or waived by the bank, could result in our outstanding loan balance being immediately accelerated, due and payable;
●
Our ability to successfully refinance the outstanding balance of the 2017 Amended Credit Agreement when due in October 2022 unless earlier accelerated, on terms acceptable to us;
● ~~Our~~Constraints on us as a result of our indebtedness, including restrictions imposed on us under the terms of our Credit Facility agreement and our ability to ~~satisfy certain lender covenants under~~generate sufficient cash flows to repay our ~~existing Fifth Amendment to Loan and Security Agreement (the “Fifth Amendment”) such as meeting cash liquidity levels of not less than $1.5 million beginning December 31. 2020;~~debt obligations;

●
~~our ability to repay or restructure our Credit Facility which matures on October 15, 2021 on terms acceptable to the Company and is stockholders;~~
● ~~our ability to raise capital through the sale of equity pursuant to the Company's current Form S-3 shelf registration statement;~~
● ~~substantial doubt exists about our ability to continue as a going concern;~~
● ~~our ability to regain compliance with New York Stock Exchange American listing requirements or face delisting from that exchange;~~
● ~~the success in any reverse stock split in regaining and maintaining compliance with the New York Stock Exchange American listing requirements;~~
● ~~continued adverse developments in the global economy and pandemic risks related to the COVID-19 virus and the resulting diminished demand for oil and natural gas;~~
● ~~continued significant decreases~~Decreases in the prices for crude oil and natural gas which ~~has resulted~~would likely result in exploration and production companies cutting back their capital expenditures for oil and gas well drilling which in turn ~~resulted~~would result in significantly reduced demand for our drilling completion services, thereby negatively affecting our revenues and results of ~~operations and financial condition;~~operations;

●
~~fierce competition~~Competition for the services we provide in our areas of operations, which has increased significantly due to the ~~continued relatively low levels~~recent increases in prices for crude oil and natural gas;
● Weather and environmental conditions, including the potential of abnormally warm winters in our areas of operations that adversely impact demand for our completion services;

●
~~our~~Our capital requirements and ~~the~~ uncertainty of ~~being able to obtain~~obtaining additional funding, whether equity or debt, on terms acceptable to us;
● ~~our lender covenants limiting our capital expenditures in 2021 to $1.2 million in any year the debt is outstanding;~~
● ~~the~~The impact of general economic conditions and supply chain shortages 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~~The geographical diversity of our operations which ~~while it could diversify the risks related to a slow-down in one area of operations, also~~ adds significantly to our costs of doing business;

●
~~our~~Our history of losses and working capital deficits which, ~~were~~at times, have been significant;
●
~~weather and environmental conditions, including abnormal 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;
● Our ability to attract and retain ~~key members of~~employees, especially in our ~~senior management~~critical heating season, given tight labor markets and ~~key technical employees;~~
the potential for pandemic related mandates;

●
~~the~~The impact of environmental, health and safety and other governmental regulations, and of current or pending legislation or regulations, including pandemic related mandates, with which we and our customers must comply;
● Reductions of leased federally owned property for oil exploration and ~~our customers must comply;~~production in addition to increased state and local regulations on drilling activity;

●
Developments in the global economy as well as pandemic risks ~~relating~~related to ~~any unforeseen liabilities;~~the COVID-19 virus and resulting demand and supply for oil and natural gas;

●
~~our ability~~Risks relating to ~~obtain total forgiveness for the PPP loans as currently anticipated;~~any unforeseen liabilities;

●
~~federal~~Federal and state initiatives relating to the regulation of hydraulic fracturing; and

●
~~any legislative or administrative changes as a result of the 2020 elections that could impact the regulatory environment in which we operate;~~
● ~~sales or issuances of our common stock and the~~The price and volume volatility of our common ~~stock;~~stock.
● the significant financial constraints imposed as a result of our indebtedness, including the fact that we have limited borrowing availability on our Credit Facility and there are restrictions imposed on us under the terms of the amended 2017 Credit Agreement and our need to generate sufficient cash flows to repay our debt obligations or refinance such debt obligations on terms acceptable to the Company and its stockholders;
● the volatility of domestic and international oil and natural gas prices and the resulting impact on production and drilling activity, and the effect that lower prices may have on our customers’ demand for our services, the result of which may adversely impact our revenues and financial performance;
●
~~changes in tax laws; and~~
●
~~the risks associated with the use of intellectual property that may be claimed by others and actual or potential litigation related thereto.~~

Finally, our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in our filings with the SEC. For additional information regarding risks and uncertainties, please read our filings with the SEC under the Exchange Act and the Securities Act, including our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere in this Quarterly Report. Other than as required under securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.

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Table of Contents

~~GOING CONCERN~~Recent Developments

~~Our financial statements~~On November 9, 2020, the Company submitted the initial Paycheck Protection Loan forgiveness application to East West Bank for review and approval. On July 8, 2021, the SBA approved our loan forgiveness application in full, which includes forgiveness of the total principal balance of $1.9 million, as well as approximately $24,000 in accrued interest.
Subsequent to September 30, 2021, the Company determined that it would be in non-compliance of its trailing three-month revenue covenant under the Credit Facility for the month ended October 31, 2021, and would likely also be in non-compliance for the trailing three-month period ending November 30, 2021. This covenant requires the Company to achieve actual revenues in an amount not less than 70% of the revenue projections previously delivered by the Company (and accepted by East West Bank) for each trailing three-month period. The Company’s non-compliance with the covenant resulted from October’s revenues being approximately $172,000 lower than what was required to meet the requirements of the covenant. The Company has determined that October’s lower revenues were the result of warmer than usual temperatures that have ~~been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realization of assets and settlement of liabilities~~existed in the ~~normal course~~areas that the Company operates which caused the Company's frac water heating season to begin later than anticipated.
On November 12, 2021, we entered into the Eighth Amendment to Loan and Security Agreement with East West Bank which, among other things, provides for a waiver of ~~business. We incurred~~default of the revenue covenant based upon our October trailing three-month period gross revenue and a ~~net loss~~reforecasting of ~~$7.7 million~~our November and December revenues from what was previously provided to East West Bank. Per the Eighth Amendment, the revenue covenant utilizing October’s revenues is waived and will not be used in any future three-month period gross revenue covenant calculation. For the month ended November 30, 2021, covenant compliance will be measured at 80% of reforecast November revenues. Covenant compliance for the ~~year~~month ended December 31, 2021 will be measured at 80% of the reforecast November and December revenues. Beginning for the month ended January 31, 2022 and continuing until March 31, 2022, revenue covenant compliance will be measured at 80% of the trailing three months forecasted gross revenues. Beginning the month ended April 30, 2022 and continuing through September 30, 2022, covenant compliance will be measured at 70% of the trailing three months forecasted gross revenues, except for the months ended April 30, 2022 and May 31, 2022, as those will include an 80% requirement for the months of February 2022 and March 2022. Upon execution of the Eighth Amendment, the Company paid East West Bank a fee of $70,000 for the October revenue waiver and the Eight Amendment.
On November 8, 2021, Amanda Mordica, a Texas resident, filed a complaint in Texas State Court in Atascosa County, against the Company, its wholly owned subsidiary, Heat Waves Hot Oil Service, LLC, and two individual former Company employees alleging negligence by the Company and its subsidiary in connection with a traffic accident sustained by Ms. Mordica on November 19, 2019. Ms. Mordica’s claim is in excess of $1.0 million. The Company has tendered this litigation to its insurer who has preliminarily indicated that they have accepted coverage. As such, the Company does not believe that this litigation will have a materially adverse impact on the Company.
On September 9, 2021, President Biden announced a new COVID-19 Action Plan entitled the “Path out of the Pandemic” (the “Plan”). The Plan mandates COVID-19 vaccinations or at least weekly COVID-19 testing for all United States employers with 100 or more employees. The United States Department of Labor’s Occupational Safety and Health Administration ("OSHA") issued on November 5, 2021 an emergency temporary standard entitled “COVID-19 Vaccination and Testing; Emergency Temporary Standard” to make the testing requirements of the Plan effective beginning January 4, 2022 until a permanent rule is later issued. Legal challenges to this standard are currently underway with additional challenges expected, which leads to uncertainty about the potential timing of when or if this standard might actually take effect. The standard also contains exemptions for “remote workers” who work 100% alone and employees who work exclusively outdoors as long as their use of indoor spaces is de minimis. Our current headcount is below the 100 employee threshold but it will likely exceed 100 employees during the heating season. We ~~have recorded net income~~believe OSHA’s exemptions may apply to some of ~~$8.4 million~~our employees, but as with any complex new standard, it is impossible to be certain how OSHA will apply it until they issue further guidance or begin enforcement. As a result, this mandate could increase the challenges of maintaining and ~~$1.2 million~~growing our number of employees across all functions. This mandate, if imposed and if we are unable to obtain appropriate exemptions, could lead to employee turnover and could materially and adversely affect our growth and profitability.
Recent Market Conditions
The recovery of the economy from the impact of COVID-19 has had a positive impact on oil prices and hence our business for the three ~~and~~months ended September 30, 2021. For the nine months ended September 30, ~~2020, inclusive~~2021, WTI crude oil price averaged approximately $65 per barrel, versus an average of approximately $38 per barrel in the comparable period last year which resulted in an increase in rig count in our markets. However, we continue to feel the impact of the $11.9 million gain on debt restructuring. As of September 30, 2020, we had total current liabilities of $4.5 million, which exceeded our total current assets of $3.0 million by $1.5 million. On August 10, 2017, we entered into the 2017 Credit Agreement, as amended, with East West Bank which provides for a three-year, $37.0 million senior secured revolving credit facility. On September 23, 2020, the Companypandemic and ~~East West Bank entered into the Fifth Amendment which, among other things, provided for a loan concession of $16.0 million in exchange 8,000,000 shares of Company common stock~~certain actions Russia and a warrant to purchase up to 15,000,000 shares of additional Company common stock in the future. On August 13, 2020, the Company exchanged 50%, or $1.25 million, of our subordinated debt with a related party, as well as $265,000 in accrued interest, for 6,054,022 shares of Company common stock.
~~The Fifth Amendment modifies~~ certain covenants and cured our previous breaches of two covenants, as well as extending the maturity date for the repayment of the Credit Facility to October 15, 2021. Since the Fifth Amendment cured the covenant breaches under the amended 2017 Credit Agreement, we are now in compliance with both our Credit Facility and subordinated debt agreement with a related party, and maturities of these debts were reclassified from current to long-term during the third quarter of 2020.
On September 28, 2020, the Company filed a prospectus supplement to finalize the Shelf Registration that was filed on July 24, 2020. On September 29, 2020, in connection with the Shelf Registration, the Company, through its sales agent AGP, released the Public Offering which has been designed to raise capital by issuing approximately 15,000,000 securities into the trading market, over-time, at the then-market price of the securities at the time they are sold.
Our ability to continue as a going concern is dependent on our ability to paydown and/or refinance the amended 2017 Credit Agreement prior to its maturity, raising further capital and our ability to further reduce costs, of which there can be no assurance. These factors raise substantial doubt over our ability to continue as a going concern and whether we will realize our assets and extinguish our liabilities in the normal course of business and at the amounts stated in the financial statements. Given our current financial situation we may be required to accept onerous terms on the transactions that we are seeking.
~~Recent Market Conditions~~
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (“COVID-19”). The pandemic has significantly impacted the economic conditions in the United States, with accelerated effects in early 2020, as federal, state and local governments react to the public health crisis, creating significant uncertainties in the United States economy. As a result of these developments, the Company has experienced and expects to further experience a material adverse impact on its revenues, results of operations and cash flows. COVID-19 related quarantines and business restrictions had a depressing impact on United States oil demand, and hence our business, during the latter half of March through much of the second quarter. The situation continues to change rapidly and additional impacts to the business may arise that we are not aware of currently. We cannot predict whether, when or the manner in which the conditions surrounding COVID-19 will change including the timing of lifting any restrictions or office closure requirements.
~~In addition, certain~~ producing countries ~~within~~with the Organization of Petroleum Exporting Countries and their allies ("OPEC+") ~~group have attempted~~undertook in early 2020 with respect to ~~increase~~increasing their market share ~~through pricing activity that has~~by increasing supply which had ~~limited~~a significant adverse impact on ~~the severe decline in~~ domestic ~~oil prices that occurred during the first quarter of 2020, and~~ drilling and operating activity within our ~~markets~~markets. While there has ~~remained depressed. Subsequent~~been a slow rebound in active North American rig count beginning in the fourth quarter of 2020, rig count as of September 30, 2021 still remains over 30% below pre-pandemic active rigs. While the COVID-19 pandemic and OPEC+ concerns have continued to impact the Company’s business when compared to pre-COVID-19 and OPEC+ activity, the Company has experienced increased demand and micro and macro-economic conditions have continued to improve, allowing the Company to expect further improvement compared to the ~~end of~~prior year.
The Company's expectations for improved activity are somewhat offset by the ~~quarter, OPEC+ countries~~change in political environment and its uncertain impact on oil exploration and production. Reductions or limitations in leasing federal property for oil exploration in addition to other measures impacting oil and gas supply and demand have ~~reportedly agreed~~had an impact on the oil exploration and production industry. Finally, to ~~cooperate in limited~~the extent that state and ~~short-term~~local governments increase regulations, there can be a negative impact to the oil exploration and production ~~cuts, the impact of which is uncertain at this time.~~industry.

The full extent of the impact of the COVID-19 ~~and~~pandemic, OPEC+ actions, USA governmental actions and oil price changes on our operations and financial performance depends on future developments that are uncertain and unpredictable, including ~~the duration and spread of~~any potential resurgence restrictions related to the pandemic, its impact on capital and financial markets, any new information that may emerge concerning the severity of other strains of the virus, its spread to other regions as well as the actions taken to contain it, production response of domestic oil producers to lower oil prices, and the adherence to ~~and continuity of~~any actions by OPEC+ ~~production cuts, among others.~~.

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Table of Contents
OVERVIEW

~~The Company,~~Enservco Corporation ("Enservco") through its ~~subsidiary, Heat Waves Hot Oil Service, LLC ("Heat Waves")~~wholly owned subsidiaries (collectively referred to as the "Company", "we" or "us") provides ~~a range of oil field~~various services to the domestic onshore oil and natural gas ~~industry through two segments: 1)~~ industry. These services include hot oiling and acidizing ("Production Services") and frac water heating ("Completion and Other Services").
We and our wholly owned subsidiaries provide well enhancement and fluid management services ~~which~~to the domestic onshore oil and natural gas industry. These services include hot oiling and acidizing and ~~2) Completion services, which includes~~ frac water heating. ~~The Company owns~~We own and ~~operates~~operate a fleet of ~~approximately 326~~approximately 327 specialized trucks, trailers, frac tanks and other well-site related equipment and ~~serves~~ serve customers in several major domestic oil and gas areas, including the DJ Basin/Niobrara area in Colorado and Wyoming, the Bakken area in North Dakota, the San Juan Basin in northwestern New Mexico, the Marcellus and Utica Shale areas in Pennsylvania and Ohio, the Jonah area, Green River and Powder River Basins in Wyoming, and the Eagle Ford Shale and East Texas Oilfield in ~~Texas and the Stack and Scoop plays in the Anadarko Basin in Oklahoma.~~Texas.
The Company’s corporate offices are located at 14133 County Road 9 1/2, Longmont, CO 80504. Our telephone number is (303) 333-3678. Our website is www.enservco.com.

RESULTS OF OPERATIONS

Executive Summary

Revenues for the three months ended September 30, 2021 increased approximately $1.3 million, or 72%, as compared to the same period in 2020 as the economy continued to emerge from the impacts related to the COVID-19 pandemic that began in March 2020 and the Company's expansion into East Texas in late second quarter 2021. Average North American rig count increased by 95% from 254 rigs in operation during the third quarter of 2020 to 496 average rigs in operation during the third quarter of 2021.
Revenues for the nine months ended September 30, ~~2020,~~2021 decreased approximately ~~$21.7~~$2.0 million, or ~~62%~~15%, ~~from~~as compared to the ~~comparable~~same nine-month period ~~last year~~in 2020 due primarily to ~~weakness in domestic oil and gas activity levels~~ ~~driven by lower commodity prices, related pricing pressures,~~ the broader impact of the COVID-19 pandemic and the inclusion of normal activity during the first quarter of 2020 that occurred prior to the pandemic and OPEC+ ~~supply cuts and~~events. Average North American rig count declined by 7% from 477 rigs in operation during the first three quarters of 2020 to 445 average rigs in operation during the first three quarters of 2021.
Segment loss for the three months ended September 30, 2021 decreased by approximately $58,000, or 8%, as compared to the same period in 2020 due primarily to the slow recovery from the COVID-19 pandemic ~~which began~~noted above. Sales, general & administrative expenses for the three months ended September 30, 2021 decreased by approximately $142,000, or 14%, as compared to the same period in ~~March~~2020 due primarily to a decrease in our outside professional fees that were incurred as a result of the debt restructuring and ATM offering in the third quarter of 2020, as well as ~~above average temperatures~~a decrease in ~~Oklahoma, Pennsylvania, and eastern Ohio during our busy season in~~bad debt expense from the ~~first quarter~~reduction of ~~2020.~~the allowance for doubtful accounts.

~~Throughout~~Segment loss for the ~~first~~ nine months ofended September 30, 2021 increased by approximately $248,000, or 25%, as compared to the same nine-month period in 2020 due primarily to the decrease in revenues resulting from the COVID-19 pandemic noted above. Sales, general & administrative expenses for the nine months ended September 30, 2021 decreased by approximately $1.2 million, or 28%, as compared to the same nine-month period in 2020 due primarily to a decrease in our professional services, bad debt expense, personnel costs, and ~~especially during~~stock-based compensation from the severance awarded to the former CEO in the second quarter of 2020, ~~we implemented several cost-cutting initiatives~~partially offset by an increase in ~~response to the negative impacts~~our public company expenses as a result of exchange fees related to our business and revenues due to the COVID-19 pandemic and the related decrease in oil prices. As a result, we have removed approximately $2.7 million in direct operating expenses, $1.2 million in sales, general and administrative expenses and $240,000 in other negative profit impacts, all on an annualized basis.share issuances.

Sales, general and administrative expense, excluding severance and transition costs, decreased by approximately $714,000 due to the reasons noted above, or 15%, year-over-year, but include the impact of approximately $301,000 of severance compensation due to the acceleration of vesting and additional restricted stock awards in connection with a separation agreement with the Company's former CEO during the second quarter of 2020.
~~Segment profits for the nine-month period ended September 30, 2020, decreased by approximately $9.1 million, or 112%, due to the reasons noted above.~~
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~~Net~~Other income for the ~~nine~~three months ended September 30, ~~2020,~~2021 was approximately ~~$1.2~~$2.7 million, compared to other income of approximately $11.5 million for the same period in 2020. This decrease of $8.8 million, or ~~$0.02 per share, compared to net loss of approximately $4.3 million, or $0.08 per share, primarily~~77%, was due to anthe $11.9 million a gain on ~~debt~~the restructuring ~~during~~of the Credit Facility in the third quarter of 2020, partially offset by the $2.0 million gain on forgiveness of the PPP Loan and $612,000 in Employee Retention Credits during the third quarter of 2021. Other income for the nine months ended September 30, 2021 was approximately $4.2 million, compared to other income of approximately $10.4 million for the same period in 2020. This decrease of $6.2 million, or 59%, was due primarily to the $11.9 million gain on the restructuring of the Credit Facility reduced by $1.7 million in interest expense during the nine months ended September 30, 2020, partially offset by the $2.0 million gain on forgiveness of the PPP Loan and $2.1 million in Employee Retention Credits during the same period in 2021.
Net loss for the three months ended September 30, 2021 was approximately $177,000, or $0.02 per share, compared to net income of approximately $8.4 million, or $2.15 per share, for the same period in 2020. Net loss for the nine months ended September 30, 2021 was approximately $4.0 million, or $0.37 per share, compared to net income of approximately $1.2 million, or $0.32 per share, for the same nine-month period in 2020 due to the factors noted ~~above that have impacted segment profits. For more information regarding~~above.
Adjusted EBITDA for the ~~gain on debt restructuring, see Note 7~~three months ended September 30, 2021 was a loss of approximately $1.5 million compared to ~~our financial statements included~~a loss of approximately $1.7 million for the same period in ~~“Item 1. Financial Statements” of this report.~~
2020. Adjusted EBITDA for the nine months ended September 30, ~~2020,~~2021 was a loss of approximately $4.1 million compared to a loss of approximately $4.3 million ~~compared to earnings of approximately $3.7 million~~ for the same nine-month period ~~last year due to the factors noted above.~~in 2020. See the section below titled ~~Adjusted~~"Adjusted EBITDA*" within this Item 2 for ~~the~~our definition of Adjusted EBITDA.
Industry Overview

~~During~~For the nine months ended September 30, ~~2020,~~2021, WTI crude oil price averaged ~~approximately $39~~approximately $65 per barrel, versus an average of approximately ~~$57~~$38 per barrel in the comparable period last year. The North American rig ~~count declined~~count increased to ~~261~~521 rigs in operation as of September 30, ~~2020,~~2021, compared to ~~860~~261 rigs at the same time a year ago. Despite the lower ~~oil price environment~~activity levels and reduced rig count in the first quarter of 2021, we have grown our ~~number of customers~~customer base and allocated resources to the most active basins. We are focused on increasing utilization levels and optimizing the deployment of our equipment and workforce while maintaining high standards for service quality and safe operations. We compete on the basis of the quality and breadth of our service offerings, as well as price.
Beginning in early March of 2020, the market experienced a precipitous decline in oil prices in response to oil demand concerns due to the economic impacts of the COVID-19 virus and ~~price.~~anticipated increases in supply from Russia and OPEC+, particularly Saudi Arabia. Additionally, the recent change in political environment has an uncertain impact on oil exploration and production. While there has been a slow rebound in active North American rig count beginning in the fourth quarter of 2020, rig count remains over 30% below pre-pandemic active rigs. We anticipate that our completion services activity and, to some degree, our gross margins will be impacted by regional changes in drilling and completion activity of our customers.
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Segment Overview

Segment Results:

Enservco’s reportable ~~business~~operating segments are Production Services and Completion and Other Services. These segments have been selected based on management’s resource allocation and performance assessment in making decisions regarding the Company.
The following is a description of the segments.

Production Services:
This segment utilizes a fleet of hot ~~oil~~oiling trucks and acidizing units to provide maintenance services to the domestic oil and gas industry. These services include hot ~~oil~~oiling services and acidizing services.

Completion and Other Services:
This segment utilizes a fleet of frac water heating units to provide frac water heating services and related support services to the domestic oil and gas industry. These services also include other services for other industries, which consist primarily of hauling and transport of materials and heat treating for customers.

Unallocated ~~and other~~
This segment includes general overhead expenses and assets associated with managing all reportable operating segments which have not been allocated to a specific segment.

The following tables set forth revenue from operations and segment profits (losses) for our business segments for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

REVENUES:
Production Services
$ 1,363 $ 3,288 $ 5,948 $ 11,239
Completion Services
401 510 7,343 23,711
Total Revenues
$ 1,764 $ 3,798 $ 13,291 $ 34,950

For the Three Months Ended
For the Nine Months Ended
September 30, September 30,

2021

2020
2021   2020
REVENUES:
Production services
$ 2,483 $ 1,363 $ 6,556 $ 5,948
Completion and other services
544 401 4,701 7,343
Total revenues
$ 3,027 $ 1,764 $ 11,257 $ 13,291
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For the Three Months Ended
For the Nine Months Ended
September 30, September 30,

2021

2020
2021 2020
SEGMENT PROFIT (LOSS):
Production services
$ (6 ) $ 16 $ (246 ) $ (707 )
Completion and other services (645 ) (725 ) (979 ) (270 )
Total segment loss
$ (651 ) $ (709 ) $ (1,225 ) $ (977 )

Three Months Ended September 30, Nine Months Ended September 30,
2020
2019

2020

2019

SEGMENT PROFIT (LOSS):
Production services
$ 16 $ (17 ) $ (707
)
$ 1,245
Completion services (725 ) (1,200 ) (270 ) 6,882
Total Segment (Loss) Profit
$ (709 ) $ (1,217 ) $ (977 ) $ 8,127
Production Services

Production Services revenues, which accounted for 77%82% of total revenue for the three months ended September 30, ~~2020,~~ ~~decreased~~2021, increased approximately ~~$2.4~~$1.1 million,, or ~~64%~~82%, to ~~$1.4~~$2.5 million compared to ~~$3.8~~$1.4 million for the same ~~quarter last year~~period in 2020 due to ~~decreased~~increased hot oiling activity, ~~levels related to the lower commodity prices.~~especially in our Central USA Region. This ~~segment,~~segment's revenues, which accounted for ~~45%~~58% of total revenue for the nine months ended September 30, ~~2020,~~ ~~decreased~~2021, increased approximately ~~$3.4 million~~,$608,000, or ~~42%~~10%, to ~~$4.6~~$6.6 million compared to ~~$8.0~~$5.9 million for the same ~~nine month~~nine-month period ~~last year~~in 2020 also due primarily to ~~a decrease~~ the increase in hot ~~oil and acidizing~~oiling activity ~~stemming from the industry downturn.~~in our Central USA Region.

Hot ~~oil revenue~~oiling revenues for the three months ended September 30, ~~2020, decreased~~2021 increased approximately ~~$1.8 million,~~$981,000, or ~~57%~~76%, as compared to the same period in 2020, from approximately $1.3 million to approximately $2.3 million, due primarily to increased domestic oil and gas activity and price levels during the third quarter of 2021. As a result of the higher crude prices during the third quarter of 2021, we have worked with our customers and have been successful in implementing price increases for hot oiling services. Hot oiling revenues for the nine months ended September 30, 2021 increased approximately $633,000, or 11%, as compared to the same nine-month period in 2020, from approximately $5.6 million to approximately $6.2 million, due to the same reasons as mentioned for the three months ended, ~~September~~ ~~30, 2019, from approximately $3.2 million to approximately $1.4 million. Hot oil revenue for~~partially offset by lower activity and price levels during the ~~nine~~ ~~months ended~~ ~~September~~ 30, 2020, decreased approximately $2.5 million, or 37%, to $4.3 million compared to $6.8 million for the same period last year. These year-over-year declines were primarily driven by reduced activity due to an industry wide downturn.first quarter of 2021.

Acidizing revenues for the three months ended September 30, ~~2020,~~ ~~decreased~~2021 increased by approximately ~~$565,000~~$139,000, or 89%199%, to ~~approximately $70,000~~approximately $209,000 from approximately ~~$635,000.~~$70,000, due to increased activity levels and continued efforts to pursue customers and partner with chemical suppliers to develop new cost-effective acid programs in seeking to expand our acidizing services across our service areas. Acidizing revenues for the nine months ended September 3~~0, 2020,~~30, 2021 decreased by approximately ~~$1.4 million,~~$25,000, or ~~79%~~7%, to ~~$371,000 compared~~approximately $345,000 from approximately $371,000. This year-over-year decline is attributable to ~~$1.8 million for~~ the ~~same period last year. These year-over-year declines were primarily driven~~significant decrease in acidizing revenues from the first quarter of 2021, partially offset by the ~~reasons noted above.~~period-over-period increases we realized in the second and third quarters of this year.

Segment profit for ~~our~~ Production Services ~~increased~~for the three months ended September 30, 2021 decreased by ~~$33,000,~~$22,000, or ~~194%~~138%, to a loss of $6,000, as compared to segment profit of $16,000 for the ~~three months ended~~ ~~September 30, 2020, compared to a loss of $17,000~~same period in ~~the same quarter last year.~~2020. Segment loss for Production Services for the nine months ended September 30, 2021 decreased by ~~$1.9 million,~~$461,000, or ~~157%~~65%, to a loss of $246,000, as compared to segment loss of $707,000 for the ~~nine~~ ~~months ended~~ ~~September 3~~0,same nine-month period in 2020, ~~compared~~which was due primarily to ~~profit of $1.2 million. The losses were primarily~~ the result of cost saving measures implemented to offset the industry conditions discussed ~~above.~~ above and increased activity in the second and third quarters of 2021.
Completion and Other Services
Completion and Other Services revenues, which accounted for 18% of total revenue for the three months ended September 30, 2021, increased approximately $143,000, or 36%, to $544,000 compared to $401,000 for the same period in 2020. This segment's revenues, which accounted for 42% of total revenue for the nine months ended September 30, 2021, decreased approximately $2.6 million, or 36%, to $4.7 million compared to $7.3 million for the same nine-month period in 2020. This year-over-year decline is attributable to the significant decrease in segment revenues from the first quarter of 2021, partially offset by the period-over-period increases we realized in the second and third quarters of this year.
Segment loss for Completion and Other Services for the three months ended September 30, 2021 was approximately $645,000 compared to segment loss of approximately $725,000 for the same period in 2020. This was due to an increase in domestic oil and gas activity in the third quarter of 2021. Segment loss for Completion and Other Services for the nine months ended September 30, 2021 was approximately $979,000 compared to segment loss of approximately $270,000 for the same period in 2020. The resulting year-over-year decrease in segment profit is related to the reasons discussed above for segment revenues.

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~~Completion Services~~
~~Completion Services, which accounted for 23~~% ~~of total revenue for the three months ended September 3~~0~~, 2020,~~ ~~decreased approximately $109,000, or 21%, to $401,000 compared to $510,000 for the same quarter last year due to the aforementioned related downturn in the industry. This segment, which accounted for 55~~% ~~of total revenue for the~~ ~~nine~~ ~~months ended September 3~~0~~, 2020,~~ ~~decreased approximately $16 million~~, or 69%, to $7.3 million compared to $23.7 million for the same nine month period last year due to the downturn in the industry, as well as above average temperatures in Oklahoma, Pennsylvania, and eastern Ohio in the first quarter of 2020.
~~The segment loss for Completion Services for the three months ended~~ ~~September 3~~0~~, 2020, was approximately $725,000 compared to segment loss of approximately $1.2 million during the three months ended~~ ~~September 3~~0~~, 2019. The segment loss for Completion Services for the nine months ended~~ ~~September 3~~0~~, 2020, was approximately $270,000 compared to segment profit of approximately $6.9 million during the nine months ended~~ ~~September 3~~0~~, 2019. These decreased segment profits are related to the reasons discussed above.~~
Geographic Areas

The Company ~~operates solely~~only conducts business in the USA, in what it believes are three geographically diverse ~~regions of the United States.~~regions. The following table sets forth revenue from operations for the Company’s three geographic regions (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019
2020

2019

BY GEOGRAPHY

Production Services:
Rocky Mountain Region ⁽¹⁾
$ 539 $ 1,330 $ 2,080 $ 5,174
Central USA Region ⁽²⁾
746 1,862 3,562 5,489
Eastern USA Region ⁽³⁾
78 96 306 576
Total Production Services 1,363 3,288 5,948 11,239

Completion Services:
Rocky Mountain Region ⁽¹⁾ 375 325 6,092 17,468
Central USA Region ⁽²⁾ - 131 108 2,976
Eastern USA Region ⁽³⁾ 26 54 1,143 3,267
Total Completion Services 401 510 7,343 23.711
Total Revenues
$ 1,764 $ 3,798 $ 13,291 $ 34,950

For the Three Months Ended
For the Nine Months Ended
September 30, September 30,

2021

2020
2021 2020
BY GEOGRAPHY

Production Services:
Rocky Mountain Region⁽¹⁾
$ 676 $ 539 $ 1,708 $ 2,080
Central USA Region⁽²⁾
1,651 746 4,304 3,562
Eastern USA Region⁽³⁾
156 78 544 306
Total Production Services 2,483 1,363 6,556 5,948

Completion and Other Services:
Rocky Mountain Reg ion⁽¹⁾
435 375 3,142 6,092
Central USA Region⁽²⁾ 38 - 38 108
Eastern USA Region⁽³⁾ 71 26 1,521 1,143
Total Completion and Other Services 544 401 4,701 7,343

Total Revenues
$ 3,027 $ 1,764 $ 11,257 $ 13,291

Notes to tables:

(1)
Includes the ~~D-J~~DJ Basin/Niobrara field (northeastern Colorado and southeastern Wyoming), the San Juan Basin (southeastern Colorado and ~~Northeastern~~northeastern New Mexico), the Powder River and Green River Basins (northeastern and southwestern Wyoming), the ~~Powder River~~Bakken area (western North Dakota and ~~Green River Basins (northeastern and southwestern Wyoming), the Bakken area (western North Dakota and~~ eastern Montana).

(2)
Includes the ~~Scoop/Stack Shale in Oklahoma and the~~ Eagle Ford Shale in ~~Texas.~~ Southern Texas and the East Texas Oil Field beginning during the second quarter of 2021.

(3)
Consists of the southern region of the ~~southern region of~~Marcellus Shale formation (southwestern Pennsylvania and northern West Virginia) and the ~~Marcellus~~Utica Shale formation ~~(southwestern Pennsylvania and northern West Virginia) and the Utica Shale formation~~ (eastern Ohio).

Production Services segment revenue in the Rocky Mountain Region for the three months ended September 30,30, 2021 increased approximately $137,000, or 25%, as compared to the same period in 2020, ~~decreased approximately $791,000, or 59~~%, primarily due t~~o less~~to an increase in acidizing and hot oiling activity in the ~~D-J and Bakken Basins.~~DJ Basin. Production Services segment revenue in the Rocky Mountain Region for the nine months ended September 30,30, 2021 decreased approximately $372,000, or 18%, as compared to the same nine-month period in 2020, ~~decreased by approximately $3.1 million, or 60%, primarily due to a decrease in acidizing and hot oiling activity in the D-J Basin and a decrease in hot oiling activity in the Bakken Basin.~~
~~Production Services segment revenue in the Central USA region for the three months ended~~ ~~September 30, 2020, decreased by approximately $1.1 million, or 60%, due to a decrease in hot oiling and acidizing activity in the Eagle Ford Shale. Production Services segment revenue in the Central USA region for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020, decreased by approximately $1.9 million, or 35%,~~ primarily due to less acidizing and hot oiling activity in the ~~Eagle Ford Shale.~~ DJ and Bakken Basins during the first quarter of 2021.

Production Services segment revenue in the Central USA Region for the three months ended September 30, 2021 increased approximately $905,000, or 121%, as compared to the same period in 2020, due to increased hot oiling activity in the Eagle Ford Shale and the introduction of the East Texas Oilfield in the second quarter of 2021. Production Services segment revenue in the Central USA Region for the nine months ended September 30, 2021 increased approximately $743,000, or 21%, as compared to the same nine-month period in 2020, due to increased hot oiling activity in the Eagle Ford Shale in the second and third quarter of 2021 and the expansion into East Texas in the second quarter of 2021.
Production Services segment revenue in the Eastern USA ~~region~~Region for the three months ended September 3~~0, 2020, decreased~~30, 2021 increased approximately ~~$18,000,~~$78,000, or ~~19%~~100%, ~~resulting from less hot oiling~~as compared to the same period in ~~the Marcellus and Utica Basins.~~2020. Production Services segment revenue in the Eastern USA ~~region~~Region for the nine months ended September 3~~0, 2020, decreased~~30, 2021 increased approximately ~~$270,000,~~$237,000, or ~~47%~~77%, ~~resulting~~as compared to the same nine-month period in 2020. These increases resulted primarily from ~~decreased~~increased hot oiling activity in the Marcellus and Utica Basins.

Completion and Other Services segment revenue in the Rocky Mountain Region for the three months ended September 3~~0, 2020,~~30, 2021 increased approximately ~~$50,000,~~$60,000, or 15%16%, as compared to the same period in 2020, primarily due to an increase in hauling activity in the ~~D-J Basin.~~region. Completion and Other Services segment revenue in the Rocky Mountain Region for the ~~nine~~ ~~months ended~~ ~~September 30, 2020, decreased by approximately $11.4 million, or 65%, due to a decline in frac heating activity in the D-J and Bakken Basins.~~
~~Completion Services segment revenue for both the three and~~ nine months ended September 30, 2021 decreased approximately $3.0 million, or 48%, as compared to the same nine-month period in 2020 ~~decreased in our Central USA and Eastern USA regions~~primarily due to ~~a decline~~less completion activity in ~~frac heating activity throughout~~ the ~~first nine months of 2020,~~DJ and Bakken Basins in ~~addition to above average temperatures in Oklahoma, Pennsylvania, and eastern Ohio during~~ the first quarter of 2021.
Completion and Other Services segment revenue in the Central USA Region for the three months ended September 30, 2021 increased approximately $38,000, or 100%, as compared to the same period in 2020, due to hauling activity in the region. Completion and Other Services segment revenue in the Central USA Region for the nine months ended September 30, 2021 decreased approximately $70,000, or 65%, as compared to the same nine-month period in 2020, primarily due to the closure of our facility in the Anadarko Basin.
Completion and Other Services segment revenue in the Eastern USA Region for the three months ended September 30, 2021 increased approximately $45,000, or 173%, as compared to the same period in 2020. Completion and Other Services segment revenue in the Eastern USA Region for the nine months ended September 30, 2021 increased approximately $378,000, or 33%, as compared to the same nine-month period in 2020. These increases resulted from increased frac water heating activity in the Marcellus and Utica Basins.

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Historical Seasonality of Revenues

Because of the seasonality of our frac water heating business and, to a lesser extent, our hot oiling business, revenues generated during the cooler first and fourth quarters of our fiscal year, which constitute our ~~“heating~~"heating season,”" and are typically significantly higher than revenues during the second and third quarters of our fiscal year. In addition, the revenue mix of our service offerings changes outside our heating season as our Completion ~~services~~and Other Services (which includes frac water heating) typically decrease as a percentage of total revenues and our Production ~~services~~Services increase as a percentage of total revenue. Thus, the revenues recognized in our quarterly financial statements in any given period are not indicative of the annual or quarterly revenues through the remainder of that fiscal year.

As an ~~indication~~illustration of this quarter-to-quarter seasonality, the Company generated approximately ~~76%~~75% of its ~~2019~~2020 revenues during the first and fourth quarters compared to ~~24%~~25% of ~~2019~~2020 revenues during the second and third quarters of 2019. In an effort to grow our year-round hot oiling revenues, in 2019 we introduced a commission program to attract and retain experienced hot oil operators, as these operators are able to retain customers in some cases regardless of which company the operator works for.quarters.

Direct Operating ~~Expenses:~~Expenses

Direct operating expenses, which include labor costs, propane, fuel, chemicals, truck repairs and maintenance, supplies, insurance, and site overhead costs for our operating segments ~~decreased~~increased by approximately ~~$2.5~~$1.2 million, or ~~51% during~~49%, for the ~~third quarter of 2020~~three months ended September 30, 2021 as compared to the same period in ~~2019,~~2020. This was due to the increased activity during the third quarter of 2021. Direct operating expenses for the nine months ended September 30, 2021 decreased by approximately $1.8 million, or 13%, as compared to the same nine-month period in 2020. This was primarily due to the severe reduction in ~~revenue,~~activity during the first quarter of 2021 discussed ~~above. During~~previously.
Sales, General, and Administrative Expenses
Sales, general, and administrative expenses for the ~~nine~~three months ended September 3~~0, 2020, direct operating expenses~~30, 2021 decreased by approximately ~~$12.6 million,~~$142,000, or ~~47%~~14%, to $907,000 as compared to the same period in ~~2019, resulting~~2020. This was due primarily ~~from the decrease in revenue discussed above as well as efficiencies gained from consolidation of Adler operations.~~
~~Sales, General, and Administrative Expenses:~~
~~During the three months ended~~ ~~September 30, 2020, sales, general, and administrative expenses decreased approximately $663,000, or 39%, to $1.0 million compared to the same period in 2019 primarily due~~ to a decrease in ~~administrative personnel costs~~our outside professional fees that were incurred as a result of the debt restructuring and ~~general office expenses. During~~ATM offering in the ~~nine~~ ~~months ended~~ ~~September 3~~0, 2020, sales, general, and administrative expenses decreased approximately $714,000, or 15%, to $4.1 million compared to the same period in 2019 primarily due to the reasons stated above and partially offset by stock compensation expense related to the acceleration of vesting and additional restricted stock awards in connection with a separation agreement with the Company's former CEO during the secondthird quarter of 2020, as well as a ~~year-over-year increase~~decrease in ~~professional fees related to our efforts in connection with seeking to restructure our debt.~~
~~Severance~~bad debt expense from the reduction of the allowance for doubtful accounts. Sales, general, and ~~Transition Costs:~~
~~Severance and transition costs decreased $83,000, or 100% compared to the same period in 2019. During~~administrative expenses for the nine months ended September 30, ~~2020, severance and transition costs increased by $56,000,~~2021 decreased approximately $1.3 million, or ~~67%~~31%, to ~~$139,000~~$2.9 million as compared to the same nine-month period in ~~2019~~2020. This was primarily due to a significant decrease in our bad debt expense, reductions in personnel costs, outside professional services related to our attempt to refinance our Credit Facility and stock-based compensation expense from the severance ~~compensation recorded~~awarded to the former CEO in ~~connection with~~the second quarter of 2020, partially offset by an increase in our public company expenses as a result of exchange fees related to our share issuances.
Depreciation and Amortization
Depreciation and amortization expenses were comparable for the three and nine months ended September 30, 2021 and 2020.
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Loss from Operations
For the three months ended September 30, 2021, the Company recognized a loss from operations of $2.9 million compared to a loss from operations of $3.1 million for the same period in 2020. This decreased loss of approximately $190,000 was primarily due to the increase in segment revenue discussed above, as well as cost saving measures implemented to offset the industry conditions. For the nine months ended September 30, 2021, the Company recognized a loss from operations of $8.1 million compared to a loss from operations of $9.2 million for the same nine-month period in 2020. This decreased loss of approximately $1.1 million was primarily due to the cost saving measures implemented to offset the industry conditions and the separation agreement with the Company's former CEO during the second quarter of 2020. As discussed above, the Company also recorded $301,000 in stock compensation expense during the second quarter of 2020 in connection with the separation agreement, which is included in sales, general and administrative expenses.

~~Depreciation and Amortization:~~Interest Expense

~~Depreciation and amortization~~Interest expense for the three months e~~nded~~ended September 30, ~~2020~~2021 decreased approximately ~~$133,000,~~$471,000, or 9%99%, ~~to $1.3 million~~as compared to the same period in ~~2019.~~  ~~Depreciation and amortization~~2020. Interest expense for the nine months e~~nded~~ended September 30, ~~2020~~2021 decreased approximately ~~$269,000,~~$1.6 million, or 6%97%, ~~to $4.0 million~~as compared to the same nine-month period in ~~2019.~~2020. These ~~decreases are due primarily to disposals of assets recorded during the second quarter of 2020.~~
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~~Table of Contents~~
~~(Loss) Income from Operations:~~
~~For the three months ended~~ ~~September 3~~0, 2020, the Company recognized a loss from operations of $3.0 million compared to a loss from operations of $4.4 million for the comparable period in 2019, a 31% smaller loss of $1.4 million on 54% less revenue. For the ~~nine~~ ~~months ended~~ ~~September 3~~0, 2020, the Company recognized a loss from operations of $9.2 million compared to a loss from operations of $1.1 million for the comparable period in 2019, an increase of $8.1 million, or 732%. The losses generated by the Company were ~~primarily due to the decrease in segment profits described above, and the improvement during the third quarter of 2020 is a direct result of cost saving measures implemented by the Company throughout 2020.~~
~~Interest Expense:~~
~~For the three months ended~~ ~~September 30, 2020, interest expense decreased approximately $218,000, or 31%, compared to the same period in 2019. For the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020, interest expense decreased approximately $570,000, or 26%, compared to the same period in 2019. The~~ decreases were primarily due to the ~~decrease~~cessation of recording interest expense after the troubled debt restructuring of our ~~average borrowings.~~Credit Facility during the third quarter of 2020.

Discontinued ~~Operations:~~Operations

Results for the three months ~~and~~ ~~nine~~ ~~months~~ ended September 30,30, 2021 and 2020 include loss from discontinued operations of approximately $0 and $7,000, respectively. Results for the nine months ended September 30, 2021 and 2020 include loss from discontinued operations of approximately $8,000 and income from discontinued operations of approximately $60,000, respectively. ~~Results for the three months and~~ ~~nine~~ ~~months ended~~ ~~September 3~~0, 2019 include losses from discontinued operations of $226,000 and $2.0 million, respectively. For more information regarding discontinued operations, see Note 6 to our financial statements included in “Item 1. Financial Statements” of this report.

Other Income (Expense):

Other income for the three months ended September 3~~0, 2020 was $11.9 million, compared to other expense of approximately $67,000 for the three months ended~~ ~~September 30, 2019. Other income for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~30, 2021 was approximately ~~$12.0~~$2.7 million compared to other income of approximately ~~$1.1~~$11.9 million for the ~~nine~~ ~~months ended~~ ~~September 30, 2019. The higher other income~~same period in ~~both the three and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~2020. This decrease of $8.8 million was ~~primarily~~ due to the $11.9 million gain on ~~debt~~the restructuring ~~during~~of the Credit Facility in the third quarter of 2020, partially offset by athe $2.0 million gain on ~~settlement~~forgiveness of the PPP Loan and $612,000 in Employee Retention Credits during the third quarter of 2021. Other income for the nine months ended September 30, 2021 was approximately $4.3 million compared to other income of approximately ~~$1.2~~$12.0 million ~~related~~for the same nine-month period in 2020. This decrease of $6.2 million was due primarily to ~~a settlement agreement with~~ the ~~sellers~~$11.9 million gain on the restructuring of ~~Adler~~the Credit Facility reduced by $1.7 million in interest expense during the ~~second quarter~~nine months ended September 30, 2020, partially offset by the $2.0 million gain on forgiveness of ~~2019.~~the PPP Loan and $2.1 million in Employee Retention Credits during the same period in 2021.

Income TaTaxes~~xes:~~

As of September 30~~, 2020,~~30, 2021, the ~~Company~~Company had recorded a full valuation allowance on a net deferred tax asset of ~~approximately $4.5~~$4.8 million. ~~During~~For the nine months ended September 30,30, 2021 and 2020, ~~and 2019,~~ the Company's tax provisions of ~~$15,000~~$0 and ~~tax provision of $32,000,~~$15,000, respectively, were adjusted by the valuation allowance which resulted in a net tax provision of zero.

Our effective tax rate ~~was 1%~~ for the ~~nine~~three months ended September 30,30, 2021 and 2020 was approximately 0%and ~~2019,~~1%, respectively. The effective tax expense for the nine months ended September 30,30, 2021 and 2020 ~~and 2019~~ differs from the amount that would be provided by applying the statutory ~~U.S.~~USA federal income tax rate of 21% to pre-tax income primarily because of state income taxes, estimated permanent differences and the recorded valuation allowance.

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Adjusted EBITDA*

Management believes that, for the reasons set forth below, Adjusted EBITDA (a non-GAAP measure) is a valuable measurement of the Company's liquidity and performance and is consistent with the measurements offered by other companies in Enservco's industry.

The following table presents a reconciliation of our net income (loss) to our Adjusted EBITDA for each of the periods indicated (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019
2020

2019

Adjusted EBITDA*

Net income (loss)
$ 8,405 $ (5,404 ) $ 1,211 $ (4,310 )
Add back

Interest expense 478 695 1,667 2,235
Provision for income tax expense 6 - 15 32
Depreciation and amortization (including discontinued operations)
1,277 1,703 3,996 5,122
EBITDA* 10,166 (3,006 ) 6,889 3,079
Add back (deduct)
Stock-based compensation 16 52 377 221
Severance and transition costs - 83 139 83
Patent litigation and defense costs - - - 10
Loss (gain) on disposal of equipment (including discontinued operations) 20 (14 ) (34 ) (2 )
Gain on debt restructuring (11,916 ) - (11,916 ) -
Impairment loss - - - 127
One-time software expense - - - 25
Other expense (income) (including discontinued operations) 1 223 282 (944 )
EBITDA related to discontinued operations - (59 ) 11 1,133
Adjusted EBITDA*
$ (1,713 ) $ (2,721 ) $ (4,252 ) $ 3,732

For the Three Months Ended
For the Nine Months Ended
September 30, September 30,

2021

2020
2021 2020
Net (loss) income
$ (177 ) $ 8,405 $ (3,956 ) $ 1,211
Add back:

Interest expense (including discontinued operations) 6 478 51 1,667
Provision for income tax expense - 6 - 15
Depreciation and amortization (including discontinued operations)
1,302 1,277 3,981 3,996
EBITDA* 1,131 10,166 76 6,889
Add back (deduct):
Stock-based compensation 21 16 70 377
Severance and transition costs - - 7 139
Loss (gain) on disposal of equipment (including discontinued operations) - 20 70 (34 )
Gain on debt restructuring - (11,916 ) - (11,916 )
Other (income) expense (2,689 ) 1 (4,276 ) 282
EBITDA related to discontinued operations - - 1 11
Adjusted EBITDA
$ (1,537 ) $ (1,713 ) $ (4,052 ) $ (4,252 )

*~~Note:~~ See below for discussion of the use of non-GAAP financial measurements.

Use of Non-GAAP Financial ~~Measures:~~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).~~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 income (loss) ~~income,~~, before interest expense, income taxes, and depreciation and amortization. Adjusted EBITDA excludes stock-based compensation expense 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 (loss) as an indicator of operating performance or any other GAAP measure.

All of the items included in the reconciliation from net income (loss) to EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles, stock-based compensation expense, 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, patent litigation and defense costs,~~assets, severance and transition 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.

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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.

Changes in Adjusted EBITDA*EBITDA

Adjusted EBITDA for the three months ended September 3~~0, 2020~~30, 2021 increased by approximately ~~$1.0 million,~~$177,000, or ~~38%~~10%, as compared to the same period in ~~2019.~~2020. This increase was primarily due to period-over-period reductions in our sales, general, and administrative expenses. Adjusted EBITDA for the nine months ended September 3~~0, 2020 decreased~~30, 2021 increased by approximately ~~$8.0 million,~~$200,000, or ~~214%~~5%, as compared to the same nine-month period in ~~2019. The~~2020. This increase ~~for the three months ended~~ was ~~due~~ primarily ~~to the lower loss from operation~~ due to ~~cost savings measures successfully implemented~~period-over-period reductions in our sales, general, and administrative expenses, offset partially by ~~by management. These~~a period-over-period decrease ~~for the nine months ended was due primarily to the decline~~ in ~~segment profits discussed above and the higher EBITDA related to discontinued operations during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2019.~~our gross margin.

LIQUIDITY AND CAPITAL RESOURCES

As of September 3~~0, 2020,~~30, 2021, we had an outstanding principal loan balance under the Amended Credit Facility of ~~approximately $18.9~~approximat ely $14.0 million ~~which includes $1.8 million of future interest payable and matures on October 15, 2021,~~ with a weighted average interest ~~rates~~rate of 8.25% per year.

The following table summarizes our statements of cash flows for the nine months ended September 30,30, 2021 and 2020 ~~and 2019~~ (in thousands):

For the Nine Months Ended September 30,

2020

2019

Net cash (used in) provided by operating activities
$ (2,295 ) $ 8,488
Net cash provided by (used in) investing activities
966 (200 )
Net cash provided by (used in) financing activities
666 (8,545 )
Net decrease in Cash and Cash Equivalents
(663 ) (257 )

Cash and Cash Equivalents, Beginning of Period
663 257

Cash and Cash Equivalents, End of Period
$ - $ -

For the Nine Months Ended
September 30,

2021

2020

Net cash used in operating activities
$ (3,883 ) $ (2,295 )
Net cash (used in) provided by investing activities
(283 ) 966
Net cash provided by financing activities
4,372 666
Net increase (decrease) in cash and cash equivalents
206 (663 )

Cash and cash equivalents, beginning of period
1,467 663

Cash and cash equivalents, end of period
$ 1,673 $ -
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The following table sets forth a summary of certain aspects of our condensed consolidated balance sheet at as of September 3030, ~~2020~~2021 and December 31, ~~2019:~~2020:

September 30,
2020

December 31,
2019

Current Assets
$ 2,988 $ 8,731
Total Assets
$ 31,226 $ 42,976
Current Liabilities
$ 4,531 $ 42,119
Total Liabilities
$ 28,222 $ 45,652
Working Capital Deficit (Current Assets net of Current Liabilities)
$ (1,543 ) $ (33,388 )
Stockholders’ Equity (Deficit)
$ 3,004 $ (2,676 )
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September 30, 2021

December 31, 2020

Current assets
$ 7,306 $ 4,880
Total assets
28,109 30,183
Current liabilities
4,493 4,574
Total liabilities
19,035 27,628
Working capital (current assets net of current liabilities)
2,813 306
Stockholders’ equity
9,074 2,555

Overview~~Overview:~~

We ~~do not currently generate adequate revenue~~have accomplished several capitalization initiatives in the past year to ~~satisfy~~deleverage our ~~current operations~~balance sheet and ~~expect~~have positioned the Company into a much more favorable liquidity situation. We successfully completed two equity offerings during late 2020 and early 2021 that provided aggregate net proceeds of $12.3 million. Additionally, we ~~will need substantial additional capital~~entered into two amendments to ~~maintain operations for at least~~our Credit Facility during the ~~remainder~~third quarter of 2020 absent a significant increase in demand for our services, which we do not expect. We cannot assure that we will be successful in raising additional debt or equity capital on terms acceptable to the Company and it stockholders, if at all. We incurred significant net operating losses during the years ended December 31, 2019, and 2018, which have continued into the nine months ended September 30, 2020 which raise substantial doubt about our ability to continue as a going concern. Our financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the ~~realization~~first quarter of ~~assets~~2021 that provided us with significant relief under our Credit Facility, including a $16.0 million principal reduction, and ~~settlement~~two extensions of ~~liabilities in the normal course of business.~~
~~Our ability to continue as a going concern is dependent on the refinancing of the amended 2017 Credit Agreement prior to maturity~~the debt which now matures on October 15, 2022. Upon closing on our second equity offering on February 11, 2021, ~~and/or raising further capital. Further, there can be no assurance that~~ we ~~will be successful in increasing~~made a $3.0 million principal payment on our ~~cash flows from operations. Given our current financial situation we may be required to accept onerous terms on the transactions that we are seeking.~~Credit Facility.

We have relied on cash flow from operations and borrowings under the $1.0 million line of credit under our ~~revolving credit agreements, and equity and debt offerings~~Credit Facility to satisfy our liquidity needs. ~~Our~~Due to the maturity date of our Credit Facility of October 15, 2022, which is less than twelve months from the date of this report, absent our ability to ~~continue~~refinance such debt or obtain equity financing, neither of which can be assured, substantial doubt exists about our ability to fund ~~operating~~our capital requirements beyond the next twelve months. As of September 30, 2021, in addition to cash ~~flow shortfalls, fund capital expenditures, and make acquisitions will depend upon our future operating performance and on the availability~~ of ~~equity and debt financing. At~~ ~~September 30, 2020,~~$1.7 million, we had ~~$671,000 of availability~~$1.0 million available under the Credit Facility. Our capital ~~requirements over~~requirements for the ~~next 12 months~~remainder of 2021 are anticipated to include, but are not limited to, operating expenses, debt servicing, and capital expenditures, including maintenance of our existing fleet of assets.
~~On March 31,~~ Under our 2017 ~~our largest shareholder, Cross River Partners, L.P., posted a letter of credit in the amount of $1.5 million in accordance with the terms of the Tenth Amendment to our 2014~~Amended Credit Agreement, we are restricted to capital expenditures of $1.2 million during 2021, of which was provided by PNC Bank. The letter of credit was converted into subordinated debt with a maturity date of June 28, 2022 with a stated interest rate of 10% per annum and a five-year warrant to purchase 967,741 shares of our common stock at an exercise price of $0.31 per share. On May 10, 2017, Cross River Partners, L.P. also provided $1.0 million in subordinated debt to us as required under the terms of the Tenth Amendment to the 2014 Credit Agreement. This subordinated debt has a stated annual interest rate of 10% and maturity date of June 28, 2022. In connection with this issuance of subordinated debt, Cross River Partners L.P. was granted a five-year warrant to purchase 645,161 shares of our common stock at an exercise price of $0.31 per share. On June 29, 2018 Cross River exercised both warrants and acquired 1,612,902 shares of our common stock. Proceeds from the exercise of the warrants in the amount of $500,000 were used to reduce the subordinated debt balance.
On November 11, 2019, Enservco and Cross River Partners, L.P. entered into an Amended and Restated Subordinated Loan Agreement (the “Amended Subordinated Loan”). The Amended Subordinated Loan increases the principal of the subordinated debt by $500,000 from $2.0 million to $2.5 million and provides Cross River Partners, L.P. with a five-year warrant to purchase 625,000 shares of the Company’s common stock at an exercise price of $0.20 per share which are fully vested upon issuance. On August 13, 2020, Enservco and Cross River Partners, L.P. entered into an agreement to reduce 50%, or $1.25 million, of the Amended Subordinated Loan principal balance and approximately $265,000 in accrued interest in exchange of 6,054,022 of the Company's common stock.we have utilized $348,000 through September 30, 2021.

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~~Interest Rate Swap~~Liquidity
On February 23, 2018, we entered into an interest rate swap agreement with East West Bank (the "2018 Swap") in order to hedge against the variability in cash flows from future interest payments related to the Credit Facility. The terms of the interest rate swap agreement included an initial notional amount of $10.0 million, a fixed payment rate of 2.52% paid by us, and a floating rate payment equal to LIBOR paid by East West Bank. The purpose of the swap agreement is to adjust the interest rate profile of our debt obligations.
~~During the second quarter of 2020, the swap instrument matured and thus is recorded at $0 compared to a liability of $23,000 as of December 31, 2019.~~
~~Liquidity:~~

As of September 30~~, 2020,~~ 30, 2021, our available liquidity wa~~s $671,000,~~was $2.7 million which represented our cash balance of $1.7 million and $1.0 million availability on the ~~2017~~line of credit under our Credit Facility. We utilize the ~~2017~~line of credit under our Credit Facility to fund working capital requirements and investments, and ~~during~~for the nine months ended September 3~~0, 2020,~~30, 2021 we ~~had~~made net ~~payments on our various lines~~line of credit repayments of approximately ~~$855,000. Subsequent to September 30, 2020, we received approximately $1.3 million in net proceeds from the sale of Company common stock through the Public Offering.~~$701,000.

Working ~~Capital:~~Capital

As of September 3~~0, 2020,~~30, 2021, we had a working ~~capital deficit~~capital of approximately ~~$1.5~~$2.8 million, compared to a working capital ~~deficit~~ of ~~$33.4 million~~$306,000 as of December 31, ~~2019.~~ 2020. The $2.5 million increase in working capital was primarily attributable to the closing of our February 2021 public offering which provided net proceeds of approximately $8.8 million, partially offset by the $3.0 principal paydown of our long-term Credit Facility.

Deferred Tax Asset, ~~net:~~net

As of September 3~~0, 2020,~~30, 2021, the Company had recorded a valuation allowance to reduce its net deferred tax assets to zero.
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Cash ~~Flow~~Flows from Operating ~~Activities:~~Activities

~~For the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020, cash~~Cash used in operating activities for the nine months ended September 30, 2021 was approximately ~~$2.3~~$3.9 million compared to ~~$8.5~~$2.3 million ~~provided by operating activities during~~for the ~~comparable~~same nine-month period in ~~2019.~~2020. The ~~decrease~~increase in cash used was attributable to the decrease in cash provided by the monetization of accounts receivable and an increase in the cash used for prepaid expenses and other current assets during the current year period, partially offset by the decrease in net ~~income,~~loss adjusted to net ~~of the $11.7 million decrease attributable to non-cash items that impacted earnings,~~cash used and the ~~decrease~~increase in cash flows related to the ~~decrease~~change in accounts payable ~~and accrued liabilities balances, partially offset by an increase in cash flows from the decrease in accounts receivables~~ balances.

Cash ~~Flow~~Flows from Investing Activities:

~~Cash~~Cash used in investing activities for the nine months ended September 30, 2021 was approximately $283,000 compared to cash provided by investing activities ~~during~~of $966,000 for the ~~nine~~ ~~months ended~~ ~~September 30, 2020 was approximately $966,000, compared to cash used in investing activities of $200,000 during the comparable~~same nine-month period in ~~2019.~~2020. This ~~increase is~~was primarily due to proceeds received from an insurance settlement and the sale of ~~equipment~~assets related to both our continuing and discontinued operations ~~as well as proceeds from an insurance claim settlement paid~~ during the ~~second quarter of 2020.~~prior year period.

Cash ~~Flow~~Flows from Financing ~~Activities:~~Activities

Cash provided by financing activities for the nine months ended September 3~~0, 2020~~30, 2021 was ~~$666,000~~approximately $4.4 million compared to cash ~~used in~~provided by financing activities of ~~$8.5 million~~$666,000 for the ~~comparable~~same nine-month period in ~~2019.~~2020. The change is ~~primarily~~ due to ~~a note repayment~~the net proceeds from our February 2021 Public Offering, partially offset by accrued future interest payments, the paydown of ~~$3.7 million~~our long-term Credit Facility during the ~~second~~first quarter of ~~2019, a decrease in net line of credit payments of $3.6 million during~~2021 and the ~~comparable time period of 2020 and~~ proceeds ~~of $1.9 million relating to~~from the ~~Paycheck Protection Program~~PPP loan during the second quarter of 2020.

~~Outlook:~~ Outlook

~~We continue~~In order to ~~face~~position us in a ~~difficult operating environment in~~more sustainable liquidity situation, we successfully completed two equity offerings during late 2020 and early 2021 that provided us with ~~exploration and production companies significantly cutting back their drilling and completions plans and exerting significant pressure on us~~aggregate net proceeds of $12.3 million. Additionally, we entered into two amendments to ~~reduce~~ our ~~prices for the services we provide. While we were able to restructure our 2017~~ Credit Facility during late third quarter 2020 and ~~were granted~~the first quarter of 2021 that provided us with significant relief, including a $16.0 million ~~concession by East West Bank, as well as~~principal reduction, and two extensions of the debt which now matures on October 15, 2022. Upon closing on our ~~success in structuring~~second equity offering, which occurred on February 11, 2021, we made a $3.0 million principal payment on our Public Offering which will provide much-needed cash for the Company, we will need additional debt or to raise additional equity capital to continue operations through 2021. We cannot assure that we will raise such capital on terms acceptable to us. Due to our lack of capital we may be forced to curtail operations in some or all of our locations which will materially adversely affect our revenues and our ability to continue as a going concern. In the event we are able to continue as a going concern, our long-term goals include driving increased fleet utilization, optimizing fleet deployment, driving further operating efficiencies through technology and proactive cost management, and de-levering our balance sheet.Credit Facility. Our business is heavily dependent on exploration and production activity levels, which fluctuate based on commodity prices, capital budgets and other factors. Activity levels significantly declined beginning in the fourth quarter of 2019 due to year-end capital budget exhaustion, decreases in drilling and completion activity and substantial price decreases for crude oil and natural gas that occurred during the first quarter of 2020 and have continued through the third quarter of 2020. Those declines may be partially mitigated by demand for our Production Services, although such services were substantially lower in the first nine months of 2020 compared to the same period in 2019. We continue to seek opportunities to expand our business operations through organic growth, including increasing the volume of current services offered to our new and existing ~~customers.~~customers and relocating more of our equipment to increase utilization. We will also continue ~~to seek~~ to expand our customer relationships while ~~seeking~~maintaining an appropriate balance between recurring maintenance work and drilling and completion related services.

Over the past three years we have invested significantly in process improvement initiatives designed to make the Company operate more efficiently and take better advantage of our expanded fleet and national leadership position in hot oiling, acidizing and frac water heating. We faced a very difficult operating environment during the first quarter of 2021 which began to improve during the second quarter of 2021 with the increases in crude oil prices and active North American oil rigs. While crude oil prices and active North American oil rigs continued to rise throughout the third quarter of 2021, rig counts continue to be over 30% below pre-pandemic levels. Additionally, E&P companies have continued their recent focus on improving free cash flow and debt reduction at the expense of rapidly increasing drilling activity even as crude oil prices rose well above $80 per barrel.
On September 9, 2021, President Biden announced a new COVID-19 Action Plan entitled the “Path out of the Pandemic” (the “Plan”). The Plan mandates COVID-19 vaccinations or at least weekly COVID-19 testing for all United States employers with 100 or more employees. The United States Department of Labor’s Occupational Safety and Health Administration ("OSHA") issued on November 5, 2021 an emergency temporary standard entitled “COVID-19 Vaccination and Testing; Emergency Temporary Standard” to make the testing requirements of the Plan effective beginning January 4, 2022 until a permanent rule is later issued. Legal challenges to this standard are currently underway with additional challenges expected, which leads to uncertainty about the potential timing of when or if this standard might actually take effect. The standard also contains exemptions for “remote workers” who work 100% alone and employees who work exclusively outdoors as long as their use of indoor spaces is de minimis. Our current headcount is below the 100 employee threshold but it will likely exceed 100 employees during the heating season. We believe OSHA’s exemptions may apply to some of our employees, but as with any complex new standard, it is impossible to be certain how OSHA will apply it until they issue further guidance or begin enforcement. As a result, this mandate could increase the challenges of maintaining and growing our number of employees across all functions. This mandate, if imposed and if we are unable to obtain appropriate exemptions, could lead to employee turnover and could materially and adversely affect our growth and profitability.
Capital Commitments and ~~Obligations:~~Obligations

Our capital obligations as of September 30, ~~2020~~2021 consist primarily the ~~amended~~ 2017 Amended Credit ~~Agreement~~Agreement which matures October 15, ~~2021.~~2022. In ~~addition,~~addition, we also have scheduled ~~interest payments for the amended 2017 Credit Agreement, as well as~~ principal payments under certain term loans, finance leases and operating leases. General terms and conditions for amounts due under these commitments and obligations are summarized in the notes to the condensed consolidated financial statements.
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OFF-BALANCE SHEET ARRANGEMENTS

As of September 3~~0, 2020,~~30, 2021, we had no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

C~~RITICAL~~CRITICAL ACCOUNTING POLICIES AND ESTIMATES

~~Going Concern~~
Our financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realization of assets and settlement of liabilities in the normal course of business. We recorded net income of $1.2 million for the ~~nine~~ ~~months ended~~ ~~September 3~~0, 2020, inclusive of a $11.9 million gain on debt restructuring. As of the balance sheet date of this report we had total current liabilities of $4.5 million, which exceeded our total current assets of $3.0 million by $1.5 million.
Our ability to continue as a going concern is dependent on the refinancing of the amended 2017 Credit Agreement prior to maturity on October 15, 2021, and/or raising further capital. These factors raise substantial doubt over our ability to continue as a going concern and whether we will realize our assets and extinguish our liabilities in the normal course of business and at the amounts stated in the financial statements.
There have been no ~~other~~ changes in our critical accounting policies since December 31, ~~2019.~~2020.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information under this Item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

~~As required by Rule 13a-15 under the~~ ~~Exchange Act, as of September 30, 2020, we~~We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and ~~procedures.~~procedures, as such term is defined under Rule 13a-15(e) or 15d-15(e) promulgated under the Exchange Act, as of September 30, 2021. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer). Based ~~upon and as of the date of~~on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~June~~September 30, ~~2020.~~2021.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There has been no change in the Company's internal control over financial reporting, as such term is defined under Rule 13a-15(f) of the Exchange Act, during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

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PART II

ITEM 1.LEGAL PROCEEDINGS

~~Enservco and~~On November 8, 2021, Amanda Mordica, a Texas resident, filed a complaint in Texas State Court in Atascosa County, against the Company, its wholly owned subsidiary, Heat Waves ~~were defendants~~Hot Oil Service, LLC, and two individual former Company employees alleging negligence by the Company and its subsidiary in connection with a ~~civil lawsuit~~traffic accident sustained by Ms. Mordica on November 19, 2019. Ms. Mordica’s claim is in ~~federal court in Colorado, Civil Action No. 1:15-cv-00983-RBJ (“Colorado Case”),~~excess of $1.0 million. The Company has tendered this litigation to its insurer who has preliminarily indicated that ~~alleged~~they have accepted coverage. As such, the Company does not believe that Enservco and Heat Waves, in offering and selling frac water heating services, infringed and induced others to infringe two patents owned by Heat-On-The-Fly, LLC (“HOTF”)- U.S. Patent No. 8,171,993 (the "'993 Patent") and U.S. Patent No. 8,739,875 (the "'875 Patent"). In March of 2019,this litigation will have a materially adverse impact on the ~~parties moved to dismiss the Colorado Case. On March 15, 2019, the Colorado Case was dismissed in its entirety without any finding of wrongdoing by Enservco or Heat Waves.~~
While the Colorado Case was pending, HOTF was issued two additional patents, which were related to the '993 and '875 Patents but were not asserted in the Colorado Case. However, on March 31, 2015, the U.S. District Court for the District of North Dakota (Civil Action No. 4:13-cv-00010) ruled, in a case not involving Enservco or Heat waves, that the '993 Patent was invalid. On January 14, 2016, the court ruled that the ‘993 Patent was also unenforceable due to inequitable conduct by HOTF and the inventor. HOTF appealed, and on May 4, 2018, the United States Court of Appeals for the Federal Circuit (Case No. 16-1894) upheld the lower court's ruling of unenforceability. In light of the foregoing, Management believes that the inequitable conduct related to the '993 Patent could serve as a basis for asserting unenforceability of the two additional patents.Company.

ITEM 1A. RISK FACTORS

See the Company’s risk factors set forth in the Company’s ~~annual report~~Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, filed on March ~~20, 2020,~~23, 2021, which is incorporated herein by reference. ~~In addition, see the additional risk factor below.~~
~~We have financial covenants under the 2017 Credit Agreement that must be met by December 31, 2020.~~
Our amended 2017 Credit Agreement requires that we meet and maintain cash liquidity levels of not less than $1.5 million beginning December 31, 2020. We are in the process of seeking sufficient capital to satisfy this covenant, including through the sale of our common stock pursuant to our recent shelf registration statement. However, in the event we are unable to raise such capital sufficient to satisfy this covenant, or a waiver from our lender, we would be in default on our Credit Facility which could have a material adverse impact us and our operations. Additionally, our Credit Facility expires on October 15, 2021, and we cannot be certain that we will able to refinance this Credit Facility which had a balance of $18.9 million (including $1.8 million in future interest payments) as of September 30, 2020.
~~Our success depends on key members of our management, the loss of any executive or key personnel could disrupt our business operations.~~
We depend, to a large extent, on the services of certain of our executive officers. The loss of the services of Rich Murphy or Marjorie Hargrave could disrupt our operations. Although we have entered into an employment agreement with Ms. Hargrave that contains, among other things, non-compete and confidentiality provisions, we may not be able to enforce the non-compete and/or confidentiality provisions in the employment agreement.
~~Our common stock may be delisted by the New York Stock Exchange American LLC.~~
We are continuing to seek to regain compliance with certain New York Stock Exchange American LLC (“NYSE American”) listing requirements. In November 2019 we received notifications from the NYSE American that we were not in compliance with the minimum stock price continued listing standards and we were not in compliance with the minimum stockholders’ equity standards. Shortly thereafter, we provided the NYSE with a plan of compliance that contemplates a combination of the debt and additional equity capital proposed to be sought by us in order to achieve the stockholders’ equity requirement, and we have received the necessary stockholder and Board of Directors approval to effect a reverse stock split of our common stock effective November 20, 2020, at an exchange ratio of 1-for-15 (1:15), in seeking to meet the minimum stock price standard.
We have updated our compliance plans with the NYSE American on an ongoing basis, and our common stock continues to be listed while we seek to regain compliance with the stockholders’ equity and stock price requirements. It is not certain how long it will take for us to meet the foregoing requirements and the NYSE American could determine to delist our common stock in the meantime.
If our common stock is delisted, we would be forced to list our common stock on the OTC Markets or some other quotation medium, depending on our ability to meet their specific requirements. In that case, we may lose the interest and support of some or all of our institutional investors and further, selling our common stock on the OTC Markets would be more difficult because smaller quantities of shares would likely be bought and sold. These factors could also result in lower prices and larger spreads in the bid and ask prices for shares of our common stock. Finally, because of additional regulatory burdens imposed upon broker-dealers with respect to lower price over the counter companies, delisting could discourage broker-dealers from effecting transactions in our stock, further limiting the liquidity of our shares. These factors could have a material adverse effect on the trading price, liquidity, value and marketability of our common stock.
~~We may potentially have to repay a portion or all of the Loan issued to us under the Paycheck Protection Program of the CARES Act.~~
On April 10, 2020, we entered into a promissory note (the "Note") with East West Bank which provided for an unsecured loan of $1.9 million pursuant to the PPP under the CARES Act. The Note has a term of 2 years with a 1% per annum interest rate. Payments are deferred for six months from the date of the Note and the Company can apply for forgiveness of all or a portion of the Note after 60 days. Pursuant to the terms of the PPP, the Note, or a portion thereof, may be forgiven if proceeds are used for qualifying expenses as described in the CARES Act, such as payroll costs, costs used to continue group health care benefits, mortgage interest payments, rent and utilities. The Company believes that it utilized all proceeds for qualifying expenses. The terms of the Note, including eligibility and forgiveness, may be subject to further requirements in regulations and guidance adopted by the SBA.
Forgiveness of the Note will be determined in accordance with the provisions of the CARES Act and applicable regulations. Any principal and interest amount outstanding after the determination of amounts forgiven will be repaid on a monthly basis. The Company has finalized its calculation of amounts forgivable in accordance with guidance issued by the SBA and submitted its application for loan forgiveness on November 9, 2020 to East West Bank. No assurance is provided that we will be able to obtain forgiveness of the Note in whole or in part.

3740
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

~~None.~~
Not applicable.

ITEM 5. OTHER INFORMATION

None.

41
Table of Contents

ITEM 6. EXHIBITS

Exhibit No.

Title
~~1.1~~ ~~Sales Agreement, dated September 28, 2020, by and between Enservco Corporation and A.G.P./Alliance Global Partners (1)~~
~~4.1~~ ~~Warrant issued to East West Bank dated September 23, 2020 (2)~~
~~5.1~~ ~~Legal Opinion of Jones & Keller, P.C. (1)~~
10.1 ~~Fifth~~Eighth Amendment to the Loan and Security Agreement ~~(2)~~
~~23.1~~ ~~Consent~~and Waiver, dated as of ~~Jones & Keller, P.C. (included in exhibit 5.1)~~ November 12, 2021, by and among Enservco Corporation, a Delaware corporation, Dillco Fluid Service, Inc., a Kansas corporation, Heat Waves Hot Oil Service LLC, a Colorado limited liability company, Heat Waves Water Management LLC, a Colorado limited liability company, and Adler Hot Oil Service, LLC, a Delaware limited liability company, and East West Bank.(1)
~~31.1~~31.1*

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 ~~(Rich~~(Richard A. Murphy, Principal Executive Officer)~~. Filed herewith.~~
~~31.2~~31.2*

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Marjorie Hargrave, Principal Financial Officer)~~. Filed herewith.~~
3232*

Certification Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~(Rich~~(Richard A. Murphy, Chief Executive Officer, and Marjorie Hargrave, Chief Financial Officer)~~. Filed herewith.~~
101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded with the Inline XBRL document)
101.SCH

Inline XBRL Taxonomy Extension Schema Document
101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.
(1) ~~Filed on September 28, 2020 as an exhibit~~Incorporated by reference to ~~our~~Exhibit 10.1 to the registrant’s Current Report on Form 8-K ~~and incorporated herein by reference.~~filed on November 15, 2021.
~~(2) Filed on September 28, 2020 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference.~~
3842
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SIGNATURES

~~In accordance with~~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 thereunto duly authorized.

ENSERVCO CORPORATION
Date: November 15, 2021

/s/ Richard A. Murphy
Director and Executive Chairman (Principal Executive Officer)
~~Date: November 12, 2020~~
~~/s/ Rich Murphy~~
~~Rich Murphy, Principal Executive Officer and Chief~~
~~Executive Officer~~

Date: November 12~~, 2020~~
15, 2021 /s/ Marjorie A. Hargrave

~~Marjorie Hargrave, Principal Financial Officer~~President and Chief Financial Officer (Principal Financial Officer)

3943

	September 30, 2021			December 31, 2020
Trucks and vehicles	$	57,076		$	57,224
Other equipment		1,961			1,319
Buildings and improvements		3,203			3,176
Land		378			378
Total property and equipment		62,618			62,097
Accumulated depreciation		(45,548	)		(41,780	)
Property and equipment, net	$	17,070		$	20,317

Consideration paid to Seller:
Cash consideration, including payment to retire Adler debt	$	6,206
Subordinated note, net of discount		4,580
Indemnity holdback at fair value		873
Earnout at fair value		44
Net purchase price	$	11,703

Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash	$	43
Accounts receivable, net		1,317
Prepaid expenses and other current assets		239
Property, plant, and equipment		9,664
Intangible assets		1,045
Accounts payable and accrued liabilities		(850	)
Total identifiable net assets		11,458
Goodwill		245
Total identifiable assets acquired	$	11,703

	2021		2022		2023		2024
Customer relationships	$	125	$	125	$	125	$	10
Patents and trademarks		93		93		93		8
Total intangible asset amortization expense	$	218	$	218	$	218	$	18

	2022		2023		2024		2025		2026
Customer relationships	$	125	$	125	$	10	$	0	$	0
Patents and trademarks		93		93		8		0		0
Total intangible asset amortization expense	$	218	$	218	$	18	$	0	$	0

	Three months ended
	September 30,
	2020			2019

Revenue	$	-		$	899
Cost of sales		-			(828	)
Sales, general, and administrative expenses		-			(11	)
Depreciation and amortization		(6	)		(300	)
Other income and expense items that are not major		(1	)		-
Pretax loss of discontinued operations related to major classes of pretax profit		(7	)		(240	)
Gain on disposal of assets		-			14
Total loss on discontinued operations that is presented in the Statements of Operations	$	(7	)	$	(226	)

	Nine months ended
	September 30,
	2020			2019

Revenue	$	-			3,194
Cost of sales		(11	)		(4,298	)
Sales, general, and administrative expenses		-			(29	)
Depreciation and amortization		(19	)		(877	)
Other income and expense items that are not major		(2	)		6
Pretax loss of discontinued operations related to major classes of pretax profit		(32	)		(2,004	)
Gain (loss) on disposal of assets		92			(2	)
Total income (loss) on discontinued operations that is presented in the Statements of Operations	$	60		$	(2,006	)

	September 30, 2021				December 31, 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. Amortization of the loan on a 10-year straight-line basis will commence on November 15, 2021. Matures October 15, 2022.	$	14,792		$		19,078
Paycheck Protection Loan. Interest is at 1% with payments deferred until October 10, 2020. Matures April 10, 2022. Loan and accrued interest forgiven in full on July 8, 2021.		0				1,940
Subordinated Promissory Note with related party. Interest at 10% and paid quarterly. Balance converted to equity in February 2021.		0				1,250
Real Estate Loan for a facility in North Dakota. Interest is at 5.75% with monthly principal and interest payment of $5,255 until October 3, 2023. Collateralized by land and property purchased with the loan.		126				167
Vehicle loans for three pickups. Interest at 8.59% with monthly principal and interest payments of $3,966. Loans paid in full in June 2021.		0				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. Loan paid in full in June 2021.		0				14
Total long-term debt		14,918				22,480
Less debt discount		0				(70	)
Less current portion		(2,057	)			(1,693	)
Long-term debt, net of debt discount and current portion	$	12,861			$	20,717

Twelve Months Ending September 30,
2021	$	110
For the twelve months ending September 30,
2022		3,247	$	2,057
2023		61		12,853
2024		8		8
2025		-
Thereafter		-
Total	$	3,426	$	14,918

	Fair Value Measurement Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value Measurement
September 30, 2020
Derivative Instrument
Interest rate swap liability	$	-	$	-	$	-	$	-

December 31, 2019
Derivative Instrument
Interest rate swap liability	$	-	$	23	$	-	$	23

Twelve Months Ending September 30,		Operating Leases			Financing Leases
2021	$	960		$	100
							Operating Leases			Finance Leases
For the twelve months ending September 30,
2022		859			62		$	859		$	28
2023		637			14			637			14
2024		548			14			548			12
2025		352			3			352			1
Thereafter		269			-
		3,625			193
2026								269			0
Total future lease payments								2,665			55
Impact of discounting		(383	)		(57	)		(259	)		(3	)
Discounted value of lease obligations	$	3,242		$	136		$	2,406		$	52

	Three Months Ended September 30,				Nine Months Ended September 30,				For the Three Months Ended				For the Nine Months Ended
	2020		2019		2020		2019		September 30,				September 30,
Operating lease expense:
									2021		2020		2021		2020
Operating lease cost:
Current lease cost	$	8	$	321	$	51	$	642	$	24	$	8	$	57	$	51
Long-term lease cost		256		194		835		387		256		256		768		835
Total operating lease cost	$	264	$	515	$	886	$	1,029	$	280	$	264	$	825	$	886

Finance lease expense:
Finance lease cost:
Amortization of right-of-use assets	$	25	$	76	$	145	$	144	$	7	$	25	$	54	$	145
Interest on lease liabilities		2		8		14		17		1		2		5		14
Total lease cost	$	27	$	84	$	159	$	161
Total finance lease cost									$	8	$	27	$	59	$	159

	Nine Months Ended June 30,
	2020			2019
Operating
Weighted-average lease term (years)		4.26			4.85
Weighted-average discount rate		6.08	%		6.08	%
Financing
Weighted-average lease term (years)		2.26			2.41
Weighted-average discount rate		5.95	%		6.10	%

	For the Nine Months Ended
	September 30,
	2021			2020
Operating:
Weighted-average lease term (years)		3.57			4.26
Weighted-average discount rate		6.09	%		6.08	%

Finance:
Weighted-average lease term (years)		2.36			2.26
Weighted-average discount rate		5.72	%		5.95	%

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

Outstanding at December 31, 2019		655,000	$	0.22		4.7	$	-
Issued		15,000,000		0.25		5.0		-
Exercised		-		-		-		-
Forfeited/Cancelled		-		-		-		-
Outstanding at September 30, 2020		15,655,000	$	0.25		4.9	$	-

Exercisable at September 30, 2020		655,000	$	0.22		4.0	$	-

						Weighted Average
				*Weighted Average*		*Remaining*
Warrants	*Shares*			*Exercise Price*		*Contractual Life (Years)*
Outstanding as of December 31, 2020		1,043,667		$	3.73		4.7
Issued		150,418			2.51		4.0
Expired		(2,000	)		10.50		-
Outstanding as of September 30, 2021		1,192,085		$	3.57		4.0

Exercisable as of September 30, 2021		1,041,667		$	3.72		3.9

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)

Outstanding at December 31, 2019		1,945,333		$	0.55		1.95	$	-
Granted		-			-		-		-
Exercised		-			-		-		-
Forfeited or Expired		(471,834	)		1.31		-		-
Outstanding at September 30, 2020		1,473,499		$	0.31		1.57	$	-

Vested or Expected to Vest at September 30, 2020		1,473,499		$	0.31		1.57	$	-
Exercisable at September 30, 2020		1,473,499		$	0.31		1.57	$	-

	Number of Shares			Weighted-Average Grant- Date Fair Value

Non-vested at December 31, 2019		53,001		$	0.22
Granted		-			-
Vested		(26,334	)		0.22
Forfeited		(26,667	)		1.92
Non-vested at September 30, 2020		-		$	-

									For the Three Months Ended				For the Nine Months Ended
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30,				September 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Stock options		1,482,347		1,973,862		1,602,073		2,211,863		2,934		98,823		4,201		106,805
Restricted stock		406,058		2,083,389		1,043,034		1,317,686		181,550		27,071		178,720		69,523
Warrants		1,796,304		30,000		1,038,212		30,000		1,192,085		119,754		1,170,204		69,214
Weighted average		3,684,709		4,087,251		3,683,319		3,559,549		1,376,569		245,648		1,353,125		245,542

	Production Services			Completion Services			Unallocated & Other		Total
Three Months Ended September 30, 2020:
Revenues	$	1,363		$	401		$	-	$	1,764
Cost of Revenue		1,347			1,126			-		2,473
Segment Profit (Loss)	$	16		$	(725	)	$	-	$	(709	)

Depreciation and Amortization	$	496		$	655		$	120	$	1,271

Capital Expenditures (Excluding Acquisitions)	$	11		$	28		$	-	$	38

Identifiable assets ⁽¹⁾	$	13,042		$	13,444		$	1,047	$	27,533

Three Months Ended September 30, 2019:
Revenues	$	3,288		$	510		$	-	$	3,798
Cost of Revenue		3,305			1,710			-	$	5,015
Segment Loss	$	(17	)	$	(1,200	)	$	-	$	(1,217	)

Depreciation and Amortization	$	673		$	706		$	25	$	1,404

Capital Expenditures (Excluding Acquisitions)	$	149		$	156		$	249	$	554

Identifiable assets⁽¹⁾	$	16,876		$	17,687		$	1,450	$	36,013

	Production Services			Completion and Other Services			Unallocated		Total
For the Three Months Ended September 30, 2021:
Revenues	$	2,483		$	544		$	0	$	3,027
Cost of revenue		2,489			1,189			0		3,678
Segment loss	$	(6	)	$	(645	)	$	0	$	(651	)

Depreciation and amortization	$	639		$	562		$	101	$	1,302
Capital expenditures	$	77		$	68		$	8	$	153
Identifiable assets⁽¹⁾	$	11,906		$	10,460		$	614	$	22,980

For the Three Months Ended September 30, 2020:
Revenues	$	1,363		$	401		$	0	$	1,764
Cost of revenue		1,347			1,126			0	$	2,473
Segment profit (loss)	$	16		$	(725	)	$	0	$	(709	)

Depreciation and amortization	$	496		$	655		$	120	$	1,271
Capital expenditures	$	11		$	28		$	0	$	39
Identifiable assets ⁽¹⁾	$	13,042		$	13,444		$	1,047	$	27,533

	Production Services			Completion and Other Services			Unallocated		Total
For the Nine Months Ended September 30, 2021:
Revenues	$	6,556		$	4,701		$	0	$	11,257
Cost of revenue		6,802			5,680			0		12,482
Segment loss	$	(246	)	$	(979	)	$	0	$	(1,225	)

Depreciation and amortization	$	1,739		$	1,935		$	301	$	3,975
Capital expenditures	$	166		$	174		$	8	$	348
Identifiable assets⁽¹⁾	$	11,906		$	10,460		$	614	$	22,980

For the Nine Months Ended September 30, 2020:
Revenues	$	5,948		$	7,343		$	0	$	13,291
Cost of revenue		6,655			7,613			0	$	14,268
Segment loss	$	(707	)	$	(270	)		0	$	(977	)

Depreciation and amortization	$	1,813		$	1,869		$	295	$	3,977
Capital expenditures	$	170		$	174		$	0	$	344
Identifiable assets⁽¹⁾	$	13,042		$	13,444		$	1,047	$	27,533

	●	~~Our~~Constraints on us as a result of our indebtedness, including restrictions imposed on us under the terms of our Credit Facility agreement and our ability to ~~satisfy certain lender covenants under~~generate sufficient cash flows to repay our ~~existing Fifth Amendment to Loan and Security Agreement (the “Fifth Amendment”) such as meeting cash liquidity levels of not less than $1.5 million beginning December 31. 2020;~~debt obligations;
	●	~~our ability to repay or restructure our Credit Facility which matures on October 15, 2021 on terms acceptable to the Company and is stockholders;~~
	●	~~our ability to raise capital through the sale of equity pursuant to the Company's current Form S-3 shelf registration statement;~~
	●	~~substantial doubt exists about our ability to continue as a going concern;~~
	●	~~our ability to regain compliance with New York Stock Exchange American listing requirements or face delisting from that exchange;~~
	●	~~the success in any reverse stock split in regaining and maintaining compliance with the New York Stock Exchange American listing requirements;~~
	●	~~continued adverse developments in the global economy and pandemic risks related to the COVID-19 virus and the resulting diminished demand for oil and natural gas;~~
	●	~~continued significant decreases~~Decreases in the prices for crude oil and natural gas which ~~has resulted~~would likely result in exploration and production companies cutting back their capital expenditures for oil and gas well drilling which in turn ~~resulted~~would result in significantly reduced demand for our drilling completion services, thereby negatively affecting our revenues and results of ~~operations and financial condition;~~operations;

	●	Weather and environmental conditions, including the potential of abnormally warm winters in our areas of operations that adversely impact demand for our completion services;
	●	~~our~~Our capital requirements and ~~the~~ uncertainty of ~~being able to obtain~~obtaining additional funding, whether equity or debt, on terms acceptable to us;

	●	~~our lender covenants limiting our capital expenditures in 2021 to $1.2 million in any year the debt is outstanding;~~
	●	~~the~~The impact of general economic conditions and supply chain shortages 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~~The geographical diversity of our operations which ~~while it could diversify the risks related to a slow-down in one area of operations, also~~ adds significantly to our costs of doing business;

	●	~~any legislative or administrative changes as a result of the 2020 elections that could impact the regulatory environment in which we operate;~~
	●	~~sales or issuances of our common stock and the~~The price and volume volatility of our common ~~stock;~~stock.
	●	the significant financial constraints imposed as a result of our indebtedness, including the fact that we have limited borrowing availability on our Credit Facility and there are restrictions imposed on us under the terms of the amended 2017 Credit Agreement and our need to generate sufficient cash flows to repay our debt obligations or refinance such debt obligations on terms acceptable to the Company and its stockholders;
	●	the volatility of domestic and international oil and natural gas prices and the resulting impact on production and drilling activity, and the effect that lower prices may have on our customers’ demand for our services, the result of which may adversely impact our revenues and financial performance;
	●	~~changes in tax laws; and~~

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
REVENUES:
Production services	$	2,483	$	1,363	$	6,556	$	5,948
Completion and other services		544		401		4,701		7,343
Total revenues	$	3,027	$	1,764	$	11,257	$	13,291

	For the Nine Months Ended September 30,
	2020			2019

Net cash (used in) provided by operating activities	$	(2,295	)	$	8,488
Net cash provided by (used in) investing activities		966			(200	)
Net cash provided by (used in) financing activities		666			(8,545	)
Net decrease in Cash and Cash Equivalents		(663	)		(257	)

Cash and Cash Equivalents, Beginning of Period		663			257

Cash and Cash Equivalents, End of Period	$	-		$	-

	For the Nine Months Ended September 30,
	2021			2020
Net cash used in operating activities	$	(3,883	)	$	(2,295	)
Net cash (used in) provided by investing activities		(283	)		966
Net cash provided by financing activities		4,372			666
Net increase (decrease) in cash and cash equivalents		206			(663	)

Cash and cash equivalents, beginning of period		1,467			663

Cash and cash equivalents, end of period	$	1,673		$	-

	September 30, 2020			December 31, 2019

Current Assets	$	2,988		$	8,731
Total Assets	$	31,226		$	42,976
Current Liabilities	$	4,531		$	42,119
Total Liabilities	$	28,222		$	45,652
Working Capital Deficit (Current Assets net of Current Liabilities)	$	(1,543	)	$	(33,388	)
Stockholders’ Equity (Deficit)	$	3,004		$	(2,676	)