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Pomerantz LLP announces that a class action lawsuit has been filed against Enservco Corporation and certain of its officers. The class action, filed in the United States District Court for the District of Colorado, and docketed under 22-cv-01267, is 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 and April 18, 2022, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
If you are a shareholder who purchased or otherwise acquired Enservco securities during the Class Period, you have until July 19, 2022 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at newaction@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
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 [Company]’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 Company’s 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.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com
CONTACT:
Robert S. Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com
888-476-6529 ext. 7980
