Enservco Corp.
Corporate Governance / Derivative
Overview
- Date:
- 1/9/2024
- Company Name:
- Enservco Corp.
- Stock Symbol:
- ENSV
- Class Period:
- FROM 5/13/2021 TO 4/18/2022
- Status:
- Filed
- Filing Date:
- 5/20/2022
- Court:
- U.S. District Court: Colorado
Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, is investigating potential claims against Enservco Corporation (NYSE: ENSV) on behalf of long-term stockholders following a class action complaint that was filed against Enservco on May 20, 2022 with a Class Period from March 23, 2021 to September 1, 2022. Our investigation concerns whether the board of directors of Enservco have breached their fiduciary duties to the company.
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. Moreover, 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: (i) Enservco had defective disclosure controls and procedures and internal control over financial reporting; (ii) 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; (iii) 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"); (iv) the Company downplayed the true scope and severity of its financial reporting issues; (v) accordingly, the Company could not file its delayed 2021 annual report with the SEC within its initially represented timeline; and (vi) as a result, the Company's public statements were materially false and misleading at all relevant times. On March 28, 2022, Enservco disclosed in an SEC filing that it had "concluded that the Company's previously issued condensed consolidated financial statements as of and for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021" (collectively, the "Relevant Periods") "should no longer be relied upon largely because of the Company's accounting for a conversion of debt to equity with a related party," namely, Cross River Partners. The Company further advised that it had "misinterpret[ed the] eligibility for certain employee retention tax credits under relevant provisions of the [CARES Act]" and would "amend its Quarterly Reports on Form 10-Q for the Relevant Periods to reflect restatements of its condensed consolidated financial statements for the Relevant Periods." On this news, Enservco's stock price fell $0.45 per share, or 12.3%, to close at $3.21 per share on March 28, 2022. On March 31, 2022, Enservco disclosed in an SEC filing that it could not timely file the Company's annual report on Form 10-K with the SEC for the quarter and year ended December 31, 2021 because the Company was "in the process of restating [its] financial statements and preparing amendments to its Quarterly Reports on Form 10-Q filings for the Relevant Periods, which must be completed prior to the completion and filing of the Enservco's Annual Report on Form 10-K for the period ended December 31, 2021." On this news, Enservco's stock price fell $0.21 per share, or 7.78%, to close at $2.49 per share on April 1, 2022. On April 4, 2022, Enservco disclosed in an SEC filing that its Chief Financial Officer, Defendant Marjorie A. Hargrave, "is departing the Company and will no longer be an executive officer and employee of the Company effective April 22, 2022." On this news, Enservco's stock price fell $0.19 per share, or 7.48%, to close at $2.35 per share on April 5, 2022. On April 11, 2022, Enservco filed amended quarterly reports with the SEC for the Relevant Periods, each of which reported adjusted net losses that increased, and adjusted other income that decreased, significantly for their respective periods. Then, on April 18, 2022, Enservco disclosed in an SEC filing that the Company "will not be filing its Form 10-K for the fiscal year ended December 31, 2021 within the 15-day extension period provided by the Companys 12b-25 filing" because it "intends to [again] amend its Quarterly Reports on Form 10-Q for the Relevant Periods to reflect restatements of its condensed consolidated financial statements for the Relevant Periods."
On this news, Enservco's stock price fell $0.38 per share, or 10.47%, to close at $3.25 per share on April 19, 2022.
If you are a long-term stockholder of Enservco, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, by telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you
Case Updates
Retainer Agreement
In making this agreement, BESPC is relying upon your representation that you held the Company’s shares during the period from 5/13/2021 to 4/18/2022 (the “Relevant Period”) and that you continue to hold Company shares. Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
Your Responsibilities as a Representative Plaintiff
As a representative plaintiff, you will have a duty to represent the interests of similarly situated shareholders and to participate in the prosecution of this litigation. You may also be asked to provide documents concerning your trading in Company stock and may be asked to sit for a deposition. Accordingly, you should preserve all documents that relate to this case until it has concluded or we inform you otherwise. Relevant documents include any information you have about the Company or your trading in Company stock, no matter how it is recorded or who is keeping it for you. If you have any questions about whether information should be retained, please contact us.You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other shareholders or the Company concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
Contingency Fee and Advancement of Expenses
BESPC will prosecute this litigation on a contingency basis. You will not be responsible for paying any legal fees, costs, or out-of-pocket expenses arising out of or related to the prosecution of this litigation, regardless of the outcome of the matter. If there is a monetary recovery in this action, BESPC will, at the conclusion of the litigation or any segment thereof, apply to the court for approval of an award of attorneys’ fees and reimbursement of expenses. BESPC may also seek a fee if we obtain substantial non-monetary relief for the Class or the Company. The court will then award fees and disbursements (if any) from the proceeds of any judgment or settlement obtained in this litigation, based on factors considered relevant by the court. Such fees, costs, and disbursements will be paid from the entire settlement amount and not only from your share of the settlement amount.
Association with Counsel
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
Other Actions
It is possible that you will not be appointed as a lead plaintiff in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.No Special Treatment
You understand that in the event we secure a recovery, you will not receive any special treatment or receive a greater share of any recovery based on your service as a named plaintiff. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
Settlement
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
No Guarantee of Success
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
Termination of This Agreement
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time. Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.