Enservco Corporation

Ticker: ENSV

Class Period Start: 05/13/2021

Class Period End: 04/18/2022

Registration Deadline: 07/19/2022

A securities class action has been filed in the USDC, CO. against Enservco Corporation (ENSV) on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Enservco securities between May 13, 2021 through April 18, 2022. 

Enservco, through its subsidiaries, provides well enhancement and fluid management services to the onshore oil and natural gas industry in the United States.

Recently, the Company has employed several tactics in an apparent effort to strengthen its balance sheets.  For example, in August 2020, Enservco’s Board of Directors approved a transaction to, inter alia, exchange 50% of the Company’s subordinated debt with Cross River Partners, L.P. (“Cross River Partners”), a related party.  Enservco’s Chief Executive Officer, Defendant Richard A. Murphy, is managing member of Cross River Capital Management, LLC, the general partner of Cross River Partners.  On February 3, 2021, Enservco exchanged the remaining 50% of its subordinated debt with Cross River Partners.  In addition, the Company awarded a warrant to Cross River Partners to purchase up to 150,418 additional shares of the Company’s common stock in the future at an exercise price of $2.507 per share.

Further, during the second quarter of 2021, Enservco amended payroll tax returns originally filed for the third and fourth quarters of 2020 to claim refundable Employee Retention Credits (“ERCs”)—a type of tax credit provided for under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”)—for those periods.

The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies.  Specifically, Defendants made false and/or misleading statements and/or failed to disclose that:

  • Enservco had defective disclosure controls and procedures and internal control over financial reporting;
  • as a result, there were errors in Enservco’s financial statements relating to, inter alia, its transactions with Cross River Partners and accounting for ERCs;
  • accordingly, the Company would need to restate certain of its financial statements and delay the filing of its 2021 annual report with the U.S. Securities and Exchange Commission (“SEC”);
  • the Company downplayed the true scope and severity of its financial reporting issues;
  • accordingly, the Company could not file its delayed 2021 annual report with the SEC within its initially represented timeline; and
  • as a result, the Company’s public statements were materially false and misleading at all relevant times.

 

 

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