UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549

______________________

FORM
10-K/A

(Amendment
No. 1)



|[X]                                                  | ANNUAL
    REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.    
|---------------------------------------------------- | ---------------------------------------------------------------------------------------
|For
    the fiscal year ended December 31, 2012     
|                                                     |                                                                                        
|[]                                                   | TRANSITION
    REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|For
    the transition period from _______ to ______



Commission
file number: 000-9494



ENSERVCO
CORPORATION

(Exact name of registrant as specified in its
charter)





|Delaware                                                                                                                                   |  | 84-0811316                                                                                                   
|------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------
|(State
                                                            or other jurisdiction of
        incorporation
        or organization) |  | (IRS
                                                            Employer
        Identification
        No.)
|                                                                                                                                           |  |                                                                                                              
|501
                                                            South Cherry St., Ste. 320
        Denver,
        CO                      |  | 80246                                                                                                        
|(Address
    of principal executive offices)                                                                                               |  | (Zip
    Code)                                                                                               



Issuer’s telephone number:(303) 333-3678









Securities
registered pursuant to Section 12(b) of the Securities Exchange Act: None



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



Common
Stock, $0.005 par value



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:

£ 
Yes   S No



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted 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 and post such files). SYes  
  £  No



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act:

£  Yes   S  No





















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 the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. S  Yes  
£  No



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.     S



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.

|                                              |  |                                
|--------------------------------------------- |  | -------------------------------
|Large
    accelerated filer £                 |  | Accelerated
    Filer £        
|Non-accelerated
filer £                       |  | Smaller
    reporting company S
|(Do not check if a smaller reporting company)



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
Yes£No S



The
aggregate market value of the common stock held by non-affiliates of the Registrant as of June 30, 2012 was approximately $3,239,537
based upon the closing sale price of the Registrant’s Common Stock of $0.55 on such date. This
determination of affiliate status is not necessarily a conclusive determination for other purposes.



As
of March 15, 2013, there were 31,825,294 shares of the Registrant’s common stock outstanding.















Explanatory
Note



Enservco
Corporation is filing this Amendment on Form 10-K/A (the “Amendment”) to our Annual Report on Form 10-K for the fiscal
year ended December 31, 2012, as originally filed with the Securities and Exchange Commission (“SEC”) on March 28,
2013 (the “Original Filing”).



Unless
we state otherwise or the context otherwise requires, references in this Amendment to “Enservco” and/or “the
Company”) refer to Enservco Corporation, a Delaware corporation and its wholly-owned subsidiaries Heat Waves Hot Oil Service,
LLC (“Heat Waves”) and Dillco Fluid Service, Inc. (“Dillco”).



This
Amendment is being filed to expand the Company’s disclosure of the PNC Credit Facility in Item 7 - “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and to add Exhibit 10.03 to Part IV – Item
15. Exhibits. These corrections do not alter or change previously reported revenue, net income or earnings per share.



In
accordance with Rule 12b-15 under the Securities Exchange Act of 1934, the complete text of each of Item 7 -
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part IV - Item
15. “Exhibits” have been amended and restated in their  entirety in this Amendment. Except as described herein,
this Amendment does not change any previously reported financial results or modify or update the disclosures to the Original
Filing. The Amendment should be read in conjunction with the Original Filing and our other filings made with the SEC
subsequent to the filing of the Original Report, including any amendments to those filings. The filing of the Amendment shall
not be deemed to be an admission that the Original Filing, when made, included any untrue statement of a material fact or
omitted to state a material fact necessary to make a statement not misleading.



The
Company has updated the Signature Page, the certifications attached as Exhibits 31.1, 31.2, 32.1 and 32.2 to reflect this amended
filing.















ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION



The
following discussion provides information regarding the results of operations for the years ended December 31, 2012 and 2011,
and our financial condition, liquidity and capital resources as of December 31, 2012 and 2011. The financial statements and the
notes thereto contain detailed information that should be referred to in conjunction with this discussion.



The
following discussion and analysis should be read in conjunction with our historical consolidated financial statements and the
accompanying notes included in our Annual Report on Form 10-K, as well as the Risk Factors included in our Form 10-K filed on
March 28, 2013.





Cautionary
Note Regarding Forward-Looking Statements



The
information discussed in our annual report on Form 10-K and the Amendment includes “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities
Exchange Act of 1934 (the “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,”
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:



| | • | capital
                                                                                                                                   requirements
                                                                                                                                   and
                                                                                                                                   uncertainty
                                                                                                                                   of
                                                                                                                                   obtaining
                                                                                                                                   additional
                                                                                                                                   funding
                                                                                                                                   on
                                                                                                                                   terms
                                                                                                                                   acceptable
                                                                                                                                   to
                                                                                                                                   us;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | price
                                                                                                                                   volatility
                                                                                                                                   of
                                                                                                                                   oil
                                                                                                                                   and
                                                                                                                                   natural
                                                                                                                                   gas
                                                                                                                                   prices,
                                                                                                                                   and
                                                                                                                                   the
                                                                                                                                   effect
                                                                                                                                   that
                                                                                                                                   lower
                                                                                                                                   prices
                                                                                                                                   may
                                                                                                                                   have
                                                                                                                                   on
                                                                                                                                   our
                                                                                                                                   customer’s
                                                                                                                                   demand
                                                                                                                                   for
                                                                                                                                   our
                                                                                                                                   services,
                                                                                                                                   the
                                                                                                                                   result
                                                                                                                                   of
                                                                                                                                   which
                                                                                                                                   may
                                                                                                                                   adversely
                                                                                                                                   impact
                                                                                                                                   our
                                                                                                                                   revenues
                                                                                                                                   and
                                                                                                                                   stockholders'
                                                                                                                                   equity;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | a
                                                                                                                                   decline
                                                                                                                                   in
                                                                                                                                   oil
                                                                                                                                   or
                                                                                                                                   natural
                                                                                                                                   gas
                                                                                                                                   production,
                                                                                                                                   and
                                                                                                                                   the
                                                                                                                                   impact
                                                                                                                                   of
                                                                                                                                   general
                                                                                                                                   economic
                                                                                                                                   conditions
                                                                                                                                   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
                                                                                                                                   broad
                                                                                                                                   geographical
                                                                                                                                   diversity
                                                                                                                                   of
                                                                                                                                   our
                                                                                                                                   operations
                                                                                                                                   which,
                                                                                                                                   while
                                                                                                                                   expected
                                                                                                                                   to
                                                                                                                                   diversify
                                                                                                                                   the
                                                                                                                                   risks
                                                                                                                                   related
                                                                                                                                   to
                                                                                                                                   a
                                                                                                                                   slow-down
                                                                                                                                   in
                                                                                                                                   one
                                                                                                                                   area
                                                                                                                                   of
                                                                                                                                   operations,
                                                                                                                                   also
                                                                                                                                   adds
                                                                                                                                   significantly
                                                                                                                                   to
                                                                                                                                   our
                                                                                                                                   costs
                                                                                                                                   of
                                                                                                                                   doing
                                                                                                                                   business;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | constraints
                                                                                                                                   on
                                                                                                                                   us
                                                                                                                                   as
                                                                                                                                   a
                                                                                                                                   result
                                                                                                                                   of
                                                                                                                                   our
                                                                                                                                   substantial
                                                                                                                                   indebtedness,
                                                                                                                                   including
                                                                                                                                   restrictions
                                                                                                                                   imposed
                                                                                                                                   on
                                                                                                                                   us
                                                                                                                                   under
                                                                                                                                   the
                                                                                                                                   terms
                                                                                                                                   of
                                                                                                                                   our
                                                                                                                                   credit
                                                                                                                                   facility
                                                                                                                                   agreement
                                                                                                                                   and
                                                                                                                                   our
                                                                                                                                   ability
                                                                                                                                   to
                                                                                                                                   generate
                                                                                                                                   sufficient
                                                                                                                                   cash
                                                                                                                                   flows
                                                                                                                                   to
                                                                                                                                   repay
                                                                                                                                   our
                                                                                                                                   debt
                                                                                                                                   obligations;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | our
                                                                                                                                   history
                                                                                                                                   of
                                                                                                                                   losses
                                                                                                                                   and
                                                                                                                                   working
                                                                                                                                   capital
                                                                                                                                   deficits
                                                                                                                                   which,
                                                                                                                                   at
                                                                                                                                   times,
                                                                                                                                   were
                                                                                                                                   significant;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | adverse
                                                                                                                                   weather
                                                                                                                                   and
                                                                                                                                   environmental
                                                                                                                                   conditions;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | reliance
                                                                                                                                   on
                                                                                                                                   a
                                                                                                                                   limited
                                                                                                                                   number
                                                                                                                                   of
                                                                                                                                   customers;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | our
                                                                                                                                   ability
                                                                                                                                   to
                                                                                                                                   retain
                                                                                                                                   key
                                                                                                                                   members
                                                                                                                                   of
                                                                                                                                   our
                                                                                                                                   senior
                                                                                                                                   management
                                                                                                                                   and
                                                                                                                                   key
                                                                                                                                   technical
                                                                                                                                   employees;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | impact
                                                                                                                                   of
                                                                                                                                   environmental,
                                                                                                                                   health
                                                                                                                                   and
                                                                                                                                   safety,
                                                                                                                                   and
                                                                                                                                   other
                                                                                                                                   governmental
                                                                                                                                   regulations,
                                                                                                                                   and
                                                                                                                                   of
                                                                                                                                   current
                                                                                                                                   or
                                                                                                                                   pending
                                                                                                                                   legislation
                                                                                                                                   with
                                                                                                                                   which
                                                                                                                                   we
                                                                                                                                   and
                                                                                                                                   our
                                                                                                                                   customers
                                                                                                                                   must
                                                                                                                                   comply;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | developments
                                                                                                                                   in
                                                                                                                                   the
                                                                                                                                   global
                                                                                                                                   economy;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | changes
                                                                                                                                   in
                                                                                                                                   tax
                                                                                                                                   laws;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | the
                                                                                                                                   effects
                                                                                                                                   of
                                                                                                                                   competition;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | the
                                                                                                                                   effect
                                                                                                                                   of
                                                                                                                                   seasonal
                                                                                                                                   factors;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | further
                                                                                                                                   sales
                                                                                                                                   or
                                                                                                                                   issuances
                                                                                                                                   of
                                                                                                                                   our
                                                                                                                                   common
                                                                                                                                   stock
                                                                                                                                   and
                                                                                                                                   the
                                                                                                                                   price
                                                                                                                                   and
                                                                                                                                   volume
                                                                                                                                   volatility
                                                                                                                                   of
                                                                                                                                   our
                                                                                                                                   common
                                                                                                                                   stock;
                                                                                                                                   and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | our
                                                                                                                                   common
                                                                                                                                   stock’s
                                                                                                                                   limited
                                                                                                                                   trading
                                                                                                                                   history.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Finally,
our future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in the
section entitled “Risk Factors” included elsewhere in our annual report on Form 10-K, filed on March 28, 2013. 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 section and elsewhere in our annual report and the Amendment. 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.







Company
Overview and Overview of the Information Presented



The
Company was incorporated as Aspen Exploration Corporation under the laws of the State of Delaware on February 28, 1980 for the
primary purpose of acquiring, exploring and developing oil and natural gas and other mineral properties. On June 30, 2009, Aspen
disposed of all of its remaining oil and natural gas producing assets and as a result was no longer engaged in active business
operations. On June 24, 2010, Aspen entered into an Agreement and Plan of Merger and Reorganization with Dillco Fluid Service,
Inc. (“Dillco”) which set forth the terms by which Dillco became a wholly owned subsidiary of Aspen on July 27, 2010
(the “Merger Transaction”).



On
December 30, 2010, Aspen changed its name to “Enservco Corporation.” As such, throughout this report the terms the
“Company” and/or “Enservco” are intended to refer to the Company on a post Merger Transaction basis and
as a whole, with respect to both historical and forward looking contexts. As a result of the Merger Transaction, the Company’s
fiscal year was modified to be the calendar year as described below.



Going
forward, and subject to the availability of adequate financing, the Company expects to continue to pursue its growth strategies
of exploring additional acquisitions, potentially expanding the geographic areas in which it operates, and diversifying the products
and services it provides to customers, as well as making further investments in its assets and equipment. The Company may require
additional debt or equity financing to fund the costs necessary to expand the services it offers. There can be no assurance that
the Company will be able to raise outside capital or have access to outside funding on reasonable terms, if at all.

















Accounting
Treatment of the Merger



The
Merger Transaction, by which Dillco became a wholly-owned subsidiary of Enservco, was treated as a "reverse acquisition"
for accounting purposes. In a reverse acquisition, although Aspen was considered to be the "legal acquirer" (that is,
Aspen (now Enservco Corporation) survived as the parent corporation), Dillco was the "accounting acquirer" (that is
because Dillco's and its subsidiaries' business was undeniably the more significant business).



Dillco’s
fiscal year end was December 31, whereas prior to the Merger Transaction Aspen’s fiscal year end was June 30. Because Dillco
was the accounting acquirer, the Merger Transaction resulted in the Company’s fiscal year end being deemed to change to
December 31. Thus, starting with its Form 10-Q filed for the quarter ended September 30, 2010, the Company began filing annual
and quarterly reports based on the December 31 fiscal year end of Dillco rather than the former (pre-acquisition) June 30 fiscal
year end of Aspen. Although not required to complete the change of the fiscal year, more than a majority of the Company’s
stockholders approved that change (as well as a change to the Company’s tax year) by consent.





Because
of the business combination by which Dillco became a wholly owned subsidiary of Enservco, no separate discussion regarding Aspen’s
financial condition or results of operations are included in this report.



Discussion
of Operations for the years ended December 31, 2012 and 2011



The
following tables show the results of operations for the periods noted. Please see information following the table for management’s
discussion of significant changes.



|                                                                      |  | Years Ended December 31,
|--------------------------------------------------------------------- |  | ------------------------
|                                                                      |  | 2012                    
|                                                                      |  |                         
|Revenues                                                              |  | $                       
|Cost of Revenue                                                       |  |                         
|Gross Profit                                                          |  |                         
|                                                                      |  |                         
|Operating Expenses                                                    |  |                         
|General and administrative expenses                                   |  |                         
|Depreciation and amortization                                         |  |                         
|Total operating expenses                                              |  |                         
|                                                                      |  |                         
|Income (Loss) from Operations                                         |  |                         
|Other Expense                                                         |  |                         
|                                                                      |  |                         
|Income (Loss) From Continuing Operations Before Tax (Expense) Benefit |  |                         
|Income Tax (Expense) Benefit                                          |  |                         
|Income (Loss) From Continuing Operations                              |  | $                       
|                                                                      |  |                         
|Discontinued Operations                                               |  |                         
|Loss from discontinued operations                                     |  |                         
|Income tax benefit                                                    |  |                         
|Loss on discontinued operations, net of tax                           |  | $                       
|                                                                      |  |                         
|Net Loss                                                              |  | $                       
|                                                                      |  |                         



|Earnings (Loss) per Common Share   |  |   |            |   |  |  |  |  |  |   |            |   |  |  |  | 
|---------------------------------- |  | - | ---------- | - |  |  |  |  |  | - | ---------- | - |  |  |  | 
|– Basic                            |  |   |            |   |  |  |  |  |  |   |            |   |  |  |  | 
|Income from continuing operations  |  | $ | 0.02       |   |  |  |  |  |  | $ | (0.07      | ) |  |  |  | 
|Discontinued operations            |  | $ | (0.02      | ) |  |  |  |  |  | $ | (0.02      | ) |  |  |  | 
|Net Loss                           |  | $ | (0.00      | ) |  |  |  |  |  | $ | (0.09      | ) |  |  |  | 
|                                   |  |   |            |   |  |  |  |  |  |   |            |   |  |  |  | 
|Earnings (Loss) per Common Share   |  |   |            |   |  |  |  |  |  |   |            |   |  |  |  | 
|– Diluted                          |  |   |            |   |  |  |  |  |  |   |            |   |  |  |  | 
|Income from continuing operations  |  | $ | 0.02       |   |  |  |  |  |  | $ | (0.07      | ) |  |  |  | 
|Discontinued operations            |  | $ | (0.02      | ) |  |  |  |  |  | $ | (0.02      | ) |  |  |  | 
|Net Loss                           |  | $ | (0.00      | ) |  |  |  |  |  | $ | (0.09      | ) |  |  |  | 
|                                   |  |   |            |   |  |  |  |  |  |   |            |   |  |  |  | 
|Basic weighted average number of   |  |   |            |   |  |  |  |  |  |   |            |   |  |  |  | 
|common shares outstanding          |  |   | 23,389,151 |   |  |  |  |  |  |   | 21,778,866 |   |  |  |  | 
|Add: Dilutive shars assuming       |  |   | 927,718    |   |  |  |  |  |  |   | —          |   |  |  |  | 
|Diluted weighted average number of |  |   | 24,316,869 |   |  |  |  |  |  |   | 21,778,866 |   |  |  |  | 
|common shares outstanding          |  |   |            |   |  |  |  |  |  |   |            |   |  |  |  | 
|                                   |  |   |            |   |  |  |  |  |  |   |            |   |  |  |  | 





































|                                              |  | Years Ended December 31,
|--------------------------------------------- |  | ------------------------
|                                              |  |                         
|                                              |  |                         
|                                              |  |                         
|EBITDA* From Continuing Operations:           |  |                         
|Income (Loss) From Continuing Operations      |  | $                       
|Add (Deduct):                                 |  |                         
|Interest expense                              |  |                         
|Income tax expense (benefit)                  |  |                         
|Depreciation and amortization                 |  |                         
|EBITDA* From Continuing Operations            |  |                         
|Add (Deduct):                                 |  |                         
|Stock-based compensation                      |  |                         
|Warrants issued                               |  |                         
|Loss on disposal of equipment                 |  |                         
|Gain on sale of investments                   |  |                         
|Other (income) expense                        |  |                         
|Adjusted EBITDA* From Continuing Operations   |  | $                       
|                                              |  |                         
|                                              |  |                         
|EBITDA* From Discontinued Operations:         |  |                         
|Loss From Discontinued Operations             |  | $                       
|Add (Deduct):                                 |  |                         
|Interest expense                              |  |                         
|Income tax benefit                            |  |                         
|Depreciation and amortization                 |  |                         
|EBITDA* From Discontinued Operations          |  |                         
|Add (Deduct):                                 |  |                         
|Stock-based compensation                      |  |                         
|Warrants issued                               |  |                         
|Loss on disposal of equipment                 |  |                         
|Gain on sale of investments                   |  |                         
|Other (income) expense                        |  |                         
|Adjusted EBITDA* From Discontinued Operations |  | $                       



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





Although
Enservco does not have segmented business operations, which would require segment reporting within the notes of its financial
statements per accounting standards, we believe that revenue by service offering may be useful to readers of our financials. The
following tables set forth revenue from continuing operations for the Company’s three service offerings during the years
ending December 31, 2012 and 2011 (for discussion around revenue from discontinued operations, see the Discontinued Operationssection below as well as Note 3 to our consolidated financial statements within the Form 10K accompanying this report):



|                                                  |  | Years Ended December 31,
|------------------------------------------------- |  | ------------------------
|                                                  |  | 2012                    
|BY SERVICE OFFERING:                              |  |                         
|Fluid Management (1)                              |  | $                       
|                                                  |  |                         
|Well Enhancement Services (2)                     |  |                         
|                                                  |  |                         
|Well Site Construction and Roustabout Services(6) |  |                         
|                                                  |  |                         
|Total Revenues                                    |  | $                       



















Enservco
has also determined that an understanding of the diversity of its operations by geography is important to an understanding of
its business operations. Enservco only does business in the United States, in what it believes are three geographically diverse
regions. The following table sets forth revenue from continuing operations for the Company’s three geographic regions during
the years ending December 31, 2012 and 2011 (again, for discussion around revenue from discontinued operations, see the Discontinued
Operations section below as well as Note 3 to our consolidated financial statements within the Form 10K accompanying this
report):



|                          |  | Years Ended December 31,
|------------------------- |  | ------------------------
|                          |  | 2012                    
|BY GEOGRAPHY:             |  |                         
|Eastern USA Region (3)    |  | $                       
|                          |  |                         
|Rocky Mountain Region (4) |  |                         
|                          |  |                         
|Central USA Region (5)    |  |                         
|                          |  |                         
|Total Revenues            |  | $                       



Notes to tables:

| | (1) | Water hauling/disposal and frac tank rental.
| | --- | --------------------------------------------

| | (2) | Services such as frac heating, acidizing, hot oil services, and pressure testing.
| | --- | ---------------------------------------------------------------------------------

| | (3) | Consists of operations and services performed in the southern region
of the Marcellus Shale formation (southwestern Pennsylvania and northern West Virginia) and the Utica Shale formation (eastern
Ohio). Heat Waves is the only Company subsidiary operating in this region.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Consists of western Colorado, southeastern Wyoming, western North
Dakota, and eastern Montana. Heat Waves is the only Company subsidiary operating in this region.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Consists of southwestern Kansas, northwestern Oklahoma, Texas panhandle,
and northern New Mexico. Both Dillco and Heat Waves engage in business operations in this region.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Amounts herein represent our Dillco construction and roustabout services.
During 2012, the Heat Waves’ construction and roustabout service line was discontinued. See Note 3 to our consolidated financial
statements accompanying the Form 10K within this report for more details.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Revenues:



The
approximately $7.6 million or 32% increase in our revenues from continuing operations in fiscal year 2012 as compared to fiscal
year 2011 is primarily due to (i) a normal winter season during the 2012-2013 heating season (as compared to thehigher-than-average
temperatures and moderate weather during the prior year’s winter), and (ii) due to increased heating capacity through the
purchase and fabrication of additional trucks and equipment to service our well enhancement services. These factors arediscussed in detail throughout this section; this section focuses on key increases in our revenues from continuing operations
from our service line offerings and geographical regions, with additional discussions for any offsetting decreases. (See the Discontinued
Operations section below for details of the revenues from discontinued operations.)



















In
general, on a service offering basis, the increase in revenues during 2012 included significant increases within our well enhancement
services, and a slight reduction in revenues during the same period in our well site construction services. Revenues from fluid
management services remained approximately the same during the twelve month period (though the revenues within this service line
changed significantly on a regional level, as discussed further below).



In
general, on a geographical basis, revenues from the eastern USA region decreased significantly during 2012, while revenues from
operations in the Rocky Mountain region increased significantly during the same period. Revenues from operations in the Central
USA region showed a slight increase during the twelve month period.



Specific
factors that increased revenues during 2012, as compared to 2011:



| | (1) | During
                                                                                                                                September
                                                                                                                                2011
                                                                                                                                the
                                                                                                                                Company
                                                                                                                                opened
                                                                                                                                two
                                                                                                                                new
                                                                                                                                operation
                                                                                                                                centers
                                                                                                                                in
                                                                                                                                a)
                                                                                                                                Cheyenne,
                                                                                                                                Wyoming
                                                                                                                                (to
                                                                                                                                expand
                                                                                                                                service
                                                                                                                                coverage
                                                                                                                                within
                                                                                                                                the
                                                                                                                                D-J
                                                                                                                                Basin
                                                                                                                                and
                                                                                                                                Niobrara
                                                                                                                                formation),
                                                                                                                                and
                                                                                                                                b)
                                                                                                                                Killdeer,
                                                                                                                                North
                                                                                                                                Dakota
                                                                                                                                (to
                                                                                                                                provide
                                                                                                                                new
                                                                                                                                service
                                                                                                                                coverage
                                                                                                                                within
                                                                                                                                the
                                                                                                                                Bakken
                                                                                                                                formation
                                                                                                                                of
                                                                                                                                western
                                                                                                                                North
                                                                                                                                Dakota
                                                                                                                                and
                                                                                                                                eastern
                                                                                                                                Montana);
| | --- | 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| | (2) | During
                                                                                                                                2012
                                                                                                                                the
                                                                                                                                Company
                                                                                                                                expanded
                                                                                                                                its
                                                                                                                                heating
                                                                                                                                capacity
                                                                                                                                by
                                                                                                                                investing
                                                                                                                                in
                                                                                                                                additional
                                                                                                                                trucks
                                                                                                                                and
                                                                                                                                equipment
                                                                                                                                to
                                                                                                                                meet
                                                                                                                                the
                                                                                                                                growing
                                                                                                                                demand
                                                                                                                                for
                                                                                                                                our
                                                                                                                                frac
                                                                                                                                heating
                                                                                                                                and
                                                                                                                                hot
                                                                                                                                oiling
                                                                                                                                services.
                                                                                                                                As
                                                                                                                                part
                                                                                                                                of
                                                                                                                                this
                                                                                                                                expansion
                                                                                                                                of
                                                                                                                                trucks
                                                                                                                                and
                                                                                                                                equipment,
                                                                                                                                the
                                                                                                                                Company
                                                                                                                                purchased
                                                                                                                                and
                                                                                                                                fabricated
                                                                                                                                two
                                                                                                                                new
                                                                                                                                hot
                                                                                                                                oil
                                                                                                                                units
                                                                                                                                and
                                                                                                                                five
                                                                                                                                double-burner
                                                                                                                                frac
                                                                                                                                heating
                                                                                                                                units
                                                                                                                                which
                                                                                                                                were
                                                                                                                                deployed
                                                                                                                                into
                                                                                                                                our
                                                                                                                                Rocky
                                                                                                                                Mountain
                                                                                                                                region;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | 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| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (3) | Though
                                                                                                                                the
                                                                                                                                Company’s
                                                                                                                                Well
                                                                                                                                Enhancement
                                                                                                                                services
                                                                                                                                of
                                                                                                                                frac
                                                                                                                                heating
                                                                                                                                and
                                                                                                                                hot
                                                                                                                                oiling
                                                                                                                                were
                                                                                                                                affected
                                                                                                                                by
                                                                                                                                higher-than-average
                                                                                                                                temperatures
                                                                                                                                and
                                                                                                                                moderate
                                                                                                                                weather
                                                                                                                                during
                                                                                                                                the
                                                                                                                                first
                                                                                                                                quarter
                                                                                                                                of
                                                                                                                                2011,
                                                                                                                                weather
                                                                                                                                patterns
                                                                                                                                returned
                                                                                                                                to
                                                                                                                                normal
                                                                                                                                during
                                                                                                                                the
                                                                                                                                end
                                                                                                                                of
                                                                                                                                the
                                                                                                                                2011-2012
                                                                                                                                heating
                                                                                                                                season
                                                                                                                                and
                                                                                                                                again
                                                                                                                                during
                                                                                                                                the
                                                                                                                                third
                                                                                                                                and
                                                                                                                                fourth
                                                                                                                                quarters
                                                                                                                                of
                                                                                                                                2012
                                                                                                                                which
                                                                                                                                are
                                                                                                                                the
                                                                                                                                start
                                                                                                                                of
                                                                                                                                the
                                                                                                                                2012-2013
                                                                                                                                heating
                                                                                                                                season.
                                                                                                                                Also,due
                                                                                                                                to
                                                                                                                                our
                                                                                                                                expansion
                                                                                                                                and
                                                                                                                                organic
                                                                                                                                growth
                                                                                                                                within
                                                                                                                                our
                                                                                                                                Rocky
                                                                                                                                Mountain
                                                                                                                                region
                                                                                                                                where
                                                                                                                                the
                                                                                                                                winter
                                                                                                                                season
                                                                                                                                has
                                                                                                                                a
                                                                                                                                tendency
                                                                                                                                to
                                                                                                                                begin
                                                                                                                                sooner
                                                                                                                                in
                                                                                                                                the
                                                                                                                                fall
                                                                                                                                and
                                                                                                                                extend
                                                                                                                                longer
                                                                                                                                through
                                                                                                                                the
                                                                                                                                spring
                                                                                                                                and
                                                                                                                                summer,
                                                                                                                                we
                                                                                                                                were
                                                                                                                                able
                                                                                                                                to
                                                                                                                                realize
                                                                                                                                a
                                                                                                                                longer
                                                                                                                                heating
                                                                                                                                season
                                                                                                                                lasting
                                                                                                                                into
                                                                                                                                the
                                                                                                                                summer
                                                                                                                                of
                                                                                                                                2012
                                                                                                                                and
                                                                                                                                we
                                                                                                                                were
                                                                                                                                also
                                                                                                                                able
                                                                                                                                to
                                                                                                                                start
                                                                                                                                the
                                                                                                                                2012
                                                                                                                                through
                                                                                                                                2013
                                                                                                                                heating
                                                                                                                                season
                                                                                                                                approximately
                                                                                                                                two
                                                                                                                                months
                                                                                                                                sooner
                                                                                                                                (beginning
                                                                                                                                in
                                                                                                                                mid-September
                                                                                                                                2012),
                                                                                                                                as
                                                                                                                                compared
                                                                                                                                to
                                                                                                                                prior
                                                                                                                                years;
                                                                                                                                and



| | (4) | Due
                                                                                                                                                                       to
                                                                                                                                                                       our
                                                                                                                                                                       expansion
                                                                                                                                                                       and
                                                                                                                                                                       organic
                                                                                                                                                                       growth
                                                                                                                                                                       within
                                                                                                                                                                       our
                                                                                                                                                                       Rocky
                                                                                                                                                                       Mountain
                                                                                                                                                                       andCentral
                                                                                                                                                                       USA
                                                                                                                                                                       regions
                                                                                                                                                                       we
                                                                                                                                                                       were
                                                                                                                                                                       also
                                                                                                                                                                       able
                                                                                                                                                                       to
                                                                                                                                                                       execute
                                                                                                                                                                       additional
                                                                                                                                                                       Fluid
                                                                                                                                                                       Management
                                                                                                                                                                       agreements
                                                                                                                                                                       with
                                                                                                                                                                       key
                                                                                                                                                                       customers
                                                                                                                                                                       during
                                                                                                                                                                       2012.
                                                                                                                                                                       These
                                                                                                                                                                       new
                                                                                                                                                                       agreements
                                                                                                                                                                       resulted
                                                                                                                                                                       in
                                                                                                                                                                       the
                                                                                                                                                                       Company
                                                                                                                                                                       investing
                                                                                                                                                                       in
                                                                                                                                                                       additional
                                                                                                                                                                       water
                                                                                                                                                                       transports.
                                                                                                                                                                       In
                                                                                                                                                                       total,
                                                                                                                                                                       the
                                                                                                                                                                       Company
                                                                                                                                                                       purchased
                                                                                                                                                                       and
                                                                                                                                                                       fabricated
                                                                                                                                                                       two
                                                                                                                                                                       new
                                                                                                                                                                       water
                                                                                                                                                                       transports,
                                                                                                                                                                       and
                                                                                                                                                                       also
                                                                                                                                                                       leased
                                                                                                                                                                       an
                                                                                                                                                                       additional
                                                                                                                                                                       seven
                                                                                                                                                                       water
                                                                                                                                                                       transports,
                                                                                                                                                                       which
                                                                                                                                                                       were
                                                                                                                                                                       deployed
                                                                                                                                                                       into
                                                                                                                                                                       our
                                                                                                                                                                       Rocky
                                                                                                                                                                       Mountain
                                                                                                                                                                       and
                                                                                                                                                                       Central
                                                                                                                                                                       USA
                                                                                                                                                                       regions
                                                                                                                                                                       during
                                                                                                                                                                       2012.
                                                                                                                                                                       This
                                                                                                                                                                       factor,
                                                                                                                                                                       standing
                                                                                                                                                                       on
                                                                                                                                                                       its
                                                                                                                                                                       own
                                                                                                                                                                       and
                                                                                                                                                                       not
                                                                                                                                                                       taking
                                                                                                                                                                       into
                                                                                                                                                                       account
                                                                                                                                                                       any
                                                                                                                                                                       other
                                                                                                                                                                       changes
                                                                                                                                                                       in
                                                                                                                                                                       revenues
                                                                                                                                                                       period-over-period,
                                                                                                                                                                       accounted
                                                                                                                                                                       foran
                                                                                                                                                                       increase
                                                                                                                                                                       of
                                                                                                                                                                       approximately
                                                                                                                                                                       $1.7
                                                                                                                                                                       million
                                                                                                                                                                       of
                                                                                                                                                                       revenues
                                                                                                                                                                       generated
                                                                                                                                                                       from
                                                                                                                                                                       our
                                                                                                                                                                       Fluid
                                                                                                                                                                       Management
                                                                                                                                                                       services
                                                                                                                                                                       within
                                                                                                                                                                       these
                                                                                                                                                                       regions
                                                                                                                                                                       during
                                                                                                                                                                       2012,as
                                                                                                                                                                       compared
                                                                                                                                                                       to
                                                                                                                                                                       2011.
                                                                                                                                                                       See
                                                                                                                                                                       below
                                                                                                                                                                       for
                                                                                                                                                                       a
                                                                                                                                                                       discussion
                                                                                                                                                                       around
                                                                                                                                                                       the
                                                                                                                                                                       decreases
                                                                                                                                                                       in
                                                                                                                                                                       Fluid
                                                                                                                                                                       Management
                                                                                                                                                                       services
                                                                                                                                                                       within
                                                                                                                                                                       our
                                                                                                                                                                       Dillco
                                                                                                                                                                       Fluid
                                                                                                                                                                       Service,
                                                                                                                                                                       Inc
                                                                                                                                                                       operations
                                                                                                                                                                       which
                                                                                                                                                                       offset
                                                                                                                                                                       the
                                                                                                                                                                       increase
                                                                                                                                                                       in
                                                                                                                                                                       revenues
                                                                                                                                                                       from
                                                                                                                                                                       our
                                                                                                                                                                       Rocky
                                                                                                                                                                       Mountain
                                                                                                                                                                       and
                                                                                                                                                                       otherCentral
                                                                                                                                                                       USA
                                                                                                                                                                       operations.
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Specific
factors that decreased revenues during 2012, as compared to 2011:



| | (1) | Revenues
                                                                                                                                in
                                                                                                                                the
                                                                                                                                Eastern
                                                                                                                                USA
                                                                                                                                region
                                                                                                                                (the
                                                                                                                                southern
                                                                                                                                Marcellus
                                                                                                                                Shale
                                                                                                                                formation
                                                                                                                                covering
                                                                                                                                southwestern
                                                                                                                                Pennsylvania
                                                                                                                                and
                                                                                                                                northern
                                                                                                                                West
                                                                                                                                Virginia)
                                                                                                                                decreased
                                                                                                                                by
                                                                                                                                approximately
                                                                                                                                $3.1
                                                                                                                                million
                                                                                                                                during
                                                                                                                                2012,
                                                                                                                                as
                                                                                                                                compared
                                                                                                                                to
                                                                                                                                2011.
                                                                                                                                Of
                                                                                                                                the
                                                                                                                                decrease
                                                                                                                                in
                                                                                                                                2012,
                                                                                                                                approximately
                                                                                                                                $2.3
                                                                                                                                million
                                                                                                                                relates
                                                                                                                                to
                                                                                                                                Well
                                                                                                                                Enhancement
                                                                                                                                services
                                                                                                                                and
                                                                                                                                $840,000
                                                                                                                                relates
                                                                                                                                to
                                                                                                                                Fluid
                                                                                                                                Management
                                                                                                                                services.
                                                                                                                                These
                                                                                                                                decreases
                                                                                                                                are
                                                                                                                                due
                                                                                                                                to;
| | --- | 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| | a. | Higher-than-average
                                                                                                                             temperatures
                                                                                                                             and
                                                                                                                             moderate
                                                                                                                             weather
                                                                                                                             during
                                                                                                                             the
                                                                                                                             2011-2012
                                                                                                                             winter
                                                                                                                             season
                                                                                                                             (what
                                                                                                                             has
                                                                                                                             been
                                                                                                                             called
                                                                                                                             one
                                                                                                                             of
                                                                                                                             the
                                                                                                                             warmest
                                                                                                                             winters
                                                                                                                             on
                                                                                                                             record);
                                                                                                                             and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | A
                                                                                                                             decrease
                                                                                                                             in
                                                                                                                             activity
                                                                                                                             and
                                                                                                                             demand
                                                                                                                             due
                                                                                                                             to
                                                                                                                             low
                                                                                                                             natural
                                                                                                                             gas
                                                                                                                             prices
                                                                                                                             in
                                                                                                                             the
                                                                                                                             region.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Therefore,
starting late in the fourth quarter of 2011 and continuing through the first quarter of 2012, we redeployed a majority of our
equipment from our operation center in the Eastern USA region to operation centers within other regions.



| | (2) | In
                                                                                                                                              spite
                                                                                                                                              of
                                                                                                                                              theexpansion
                                                                                                                                              and
                                                                                                                                              organic
                                                                                                                                              growth
                                                                                                                                              within
                                                                                                                                              our
                                                                                                                                              Rocky
                                                                                                                                              Mountain
                                                                                                                                              andCentral
                                                                                                                                              USA
                                                                                                                                              regions
                                                                                                                                              during
                                                                                                                                              2012
                                                                                                                                              as
                                                                                                                                              explained
                                                                                                                                              above,
                                                                                                                                              Fluid
                                                                                                                                              Management
                                                                                                                                              services
                                                                                                                                              within
                                                                                                                                              our
                                                                                                                                              Dillco
                                                                                                                                              Fluid
                                                                                                                                              Service,
                                                                                                                                              Inc.
                                                                                                                                              operations
                                                                                                                                              (part
                                                                                                                                              of
                                                                                                                                              our
                                                                                                                                              Central
                                                                                                                                              USA
                                                                                                                                              region)
                                                                                                                                              decreased
                                                                                                                                              by
                                                                                                                                              approximately
                                                                                                                                              $1.0
                                                                                                                                              million
                                                                                                                                              during
                                                                                                                                              2012,
                                                                                                                                              as
                                                                                                                                              compared
                                                                                                                                              to
                                                                                                                                              2011,
                                                                                                                                              due
                                                                                                                                              to
                                                                                                                                              losing
                                                                                                                                              a
                                                                                                                                              member
                                                                                                                                              of
                                                                                                                                              our
                                                                                                                                              Dillco
                                                                                                                                              Fluid
                                                                                                                                              Service,
                                                                                                                                              Inc.
                                                                                                                                              operations
                                                                                                                                              management
                                                                                                                                              team
                                                                                                                                              who
                                                                                                                                              took
                                                                                                                                              his
                                                                                                                                              small
                                                                                                                                              number
                                                                                                                                              of
                                                                                                                                              fluid
                                                                                                                                              service
                                                                                                                                              trucks
                                                                                                                                              and
                                                                                                                                              equipment
                                                                                                                                              and
                                                                                                                                              certain
                                                                                                                                              small,
                                                                                                                                              independent-customers
                                                                                                                                              to
                                                                                                                                              explore
                                                                                                                                              his
                                                                                                                                              own
                                                                                                                                              business
                                                                                                                                              opportunities.
| | --- | 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Historical
Seasonality of Revenues.Because of the seasonality of our frac heating and hot oiling business, the second and third quarters
are historically our lowest revenue generating periods of our fiscal year. In addition, the revenue mix of our service offerings
also changes as our Well Enhancement services (which includes frac heating and hot oiling) decrease as a percentage of total revenues
and Fluid Management services and other services increase. The first and fourth quarters of our fiscal year, covering the months
during what is known as our “heating season”, have historically made up approximately 60% or more of our total fiscal
year revenues, with the remaining 40% historically split evenly between the second and third quarters. Thus, the revenues recognized
in our quarterly financials in any given period are not indicative of the annual or quarterly revenues through the remainder of
that fiscal year.



As
an indication of this quarter-to-quarter seasonality, the Company earned approximately $5.5 million and $5.2 million of its 2012
revenues during the second and third quarters of 2012, respectively, while earning approximately $9.5 million and $11.3 million
during the first and fourth quarters of 2012, respectively. The 2011 comparison was similar; $4.2 million and $4.3 million in
revenues during the second and third quarters of 2011, respectively, as compared to approximately $9.1 million and $6.3 million
during the first and fourth quarters of 2011, respectively. While the Company is pursuing various strategies to lessen these quarterly
fluctuations by increasing non-seasonal business opportunities, there can be no assurance that we will be successful in doing
so.



















Costs
of Revenues and Gross Profit:



Although
revenues from continuing operations increased during fiscal year 2012, cost of revenues from continuing operations as a percentage
of revenues remained relatively consistent when compared to the same period in 2011, resulting in consistent gross profit margins
for both periods. (See the Discontinued Operations section below for details of the costs of revenues and gross profit
from discontinued operations.)



This
relatively consistent cost of revenues and consistent profitability rate for the two periods is primarily due to the following
factors:



| | (1) | Although
                                                                                                                             historically
                                                                                                                             we
                                                                                                                             experience
                                                                                                                             higher
                                                                                                                             gross
                                                                                                                             profit
                                                                                                                             margins
                                                                                                                             for
                                                                                                                             Well
                                                                                                                             Enhancement
                                                                                                                             services
                                                                                                                             and
                                                                                                                             have
                                                                                                                             historically
                                                                                                                             derived
                                                                                                                             approximately
                                                                                                                             55%
                                                                                                                             of
                                                                                                                             our
                                                                                                                             consolidated
                                                                                                                             revenues
                                                                                                                             from
                                                                                                                             this
                                                                                                                             line
                                                                                                                             of
                                                                                                                             service,
                                                                                                                             in
                                                                                                                             2012,
                                                                                                                             due
                                                                                                                             to
                                                                                                                             new
                                                                                                                             frac
                                                                                                                             heating
                                                                                                                             and
                                                                                                                             hot
                                                                                                                             oiling
                                                                                                                             customers
                                                                                                                             in
                                                                                                                             our
                                                                                                                             Rocky
                                                                                                                             Mountain
                                                                                                                             and
                                                                                                                             Central
                                                                                                                             USA
                                                                                                                             regions,
                                                                                                                             our
                                                                                                                             Well
                                                                                                                             Enhancement
                                                                                                                             services
                                                                                                                             consisted
                                                                                                                             of
                                                                                                                             approximately
                                                                                                                             65%
                                                                                                                             of
                                                                                                                             our
                                                                                                                             2012
                                                                                                                             consolidated
                                                                                                                             revenues.
                                                                                                                             The
                                                                                                                             change
                                                                                                                             in
                                                                                                                             revenue
                                                                                                                             mix
                                                                                                                             increased
                                                                                                                             our
                                                                                                                             profitability
                                                                                                                             in
                                                                                                                             this
                                                                                                                             service
                                                                                                                             line
                                                                                                                             during
                                                                                                                             2012;
                                                                                                                             and
| | --- | 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| | (2) | Though
                                                                                                                             new
                                                                                                                             frac
                                                                                                                             heating
                                                                                                                             and
                                                                                                                             hot
                                                                                                                             oiling
                                                                                                                             customers
                                                                                                                             in
                                                                                                                             our
                                                                                                                             Rocky
                                                                                                                             Mountain
                                                                                                                             and
                                                                                                                             Central
                                                                                                                             USA
                                                                                                                             regions
                                                                                                                             provided
                                                                                                                             for
                                                                                                                             an
                                                                                                                             increase
                                                                                                                             to
                                                                                                                             our
                                                                                                                             revenue
                                                                                                                             mix
                                                                                                                             from
                                                                                                                             Well
                                                                                                                             Enhancement
                                                                                                                             services
                                                                                                                             during
                                                                                                                             2012,
                                                                                                                             resulting
                                                                                                                             in
                                                                                                                             a
                                                                                                                             positive
                                                                                                                             swing
                                                                                                                             in
                                                                                                                             our
                                                                                                                             profitability,
                                                                                                                             this
                                                                                                                             increased
                                                                                                                             profitability
                                                                                                                             was
                                                                                                                             primarily
                                                                                                                             realized
                                                                                                                             only
                                                                                                                             during
                                                                                                                             the
                                                                                                                             fourth
                                                                                                                             quarter
                                                                                                                             of
                                                                                                                             2012.
                                                                                                                             As
                                                                                                                             discussed
                                                                                                                             throughout
                                                                                                                             this
                                                                                                                             report,
                                                                                                                             the
                                                                                                                             Company
                                                                                                                             relies
                                                                                                                             heavily
                                                                                                                             on
                                                                                                                             the
                                                                                                                             ability
                                                                                                                             to
                                                                                                                             generate
                                                                                                                             the
                                                                                                                             majority
                                                                                                                             of
                                                                                                                             its
                                                                                                                             revenues
                                                                                                                             and
                                                                                                                             gross
                                                                                                                             profit
                                                                                                                             during
                                                                                                                             the
                                                                                                                             heating
                                                                                                                             season
                                                                                                                             during
                                                                                                                             the
                                                                                                                             first
                                                                                                                             and
                                                                                                                             fourth
                                                                                                                             quarters
                                                                                                                             of
                                                                                                                             our
                                                                                                                             fiscal
                                                                                                                             year
                                                                                                                             (when
                                                                                                                             temperatures
                                                                                                                             are
                                                                                                                             colder)
                                                                                                                             through
                                                                                                                             its
                                                                                                                             frac
                                                                                                                             heating
                                                                                                                             and
                                                                                                                             hot
                                                                                                                             oiling
                                                                                                                             services.
                                                                                                                             As
                                                                                                                             such,
                                                                                                                             during
                                                                                                                             the
                                                                                                                             third
                                                                                                                             and
                                                                                                                             fourth
                                                                                                                             quarters
                                                                                                                             of
                                                                                                                             2011,
                                                                                                                             in
                                                                                                                             order
                                                                                                                             to
                                                                                                                             provide
                                                                                                                             sufficient
                                                                                                                             drivers
                                                                                                                             and
                                                                                                                             operators
                                                                                                                             for
                                                                                                                             the
                                                                                                                             2011-2012
                                                                                                                             heating
                                                                                                                             season,
                                                                                                                             the
                                                                                                                             Company
                                                                                                                             began
                                                                                                                             fully
                                                                                                                             staffing
                                                                                                                             its
                                                                                                                             operational
                                                                                                                             centers
                                                                                                                             with
                                                                                                                             drivers
                                                                                                                             and
                                                                                                                             operators
                                                                                                                             in
                                                                                                                             order
                                                                                                                             to
                                                                                                                             meet
                                                                                                                             the
                                                                                                                             expected
                                                                                                                             demand
                                                                                                                             during
                                                                                                                             the
                                                                                                                             heating
                                                                                                                             season.
                                                                                                                             However,
                                                                                                                             due
                                                                                                                             to
                                                                                                                             higher-than-expected
                                                                                                                             temperatures
                                                                                                                             during
                                                                                                                             the
                                                                                                                             2011-2012
                                                                                                                             heating
                                                                                                                             season,
                                                                                                                             the
                                                                                                                             expected
                                                                                                                             demand
                                                                                                                             for
                                                                                                                             our
                                                                                                                             heating
                                                                                                                             services
                                                                                                                             (frac
                                                                                                                             heating
                                                                                                                             and
                                                                                                                             hot
                                                                                                                             oiling)
                                                                                                                             was
                                                                                                                             delayed
                                                                                                                             for
                                                                                                                             several
                                                                                                                             months.
                                                                                                                             As
                                                                                                                             such,
                                                                                                                             during
                                                                                                                             the
                                                                                                                             first
                                                                                                                             and
                                                                                                                             second
                                                                                                                             quarters
                                                                                                                             of
                                                                                                                             2012,
                                                                                                                             the
                                                                                                                             lower-than
                                                                                                                             expected
                                                                                                                             revenues
                                                                                                                             generated
                                                                                                                             in
                                                                                                                             those
                                                                                                                             periods
                                                                                                                             were
                                                                                                                             not
                                                                                                                             able
                                                                                                                             to
                                                                                                                             produce
                                                                                                                             the
                                                                                                                             same
                                                                                                                             historical
                                                                                                                             profit
                                                                                                                             margins
                                                                                                                             for
                                                                                                                             those
                                                                                                                             periods
                                                                                                                             due
                                                                                                                             to
                                                                                                                             the
                                                                                                                             increased
                                                                                                                             direct
                                                                                                                             costs
                                                                                                                             incurred.
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General
and Administrative Expenses:



For
the twelve months ended December 31, 2012, general and administrative expenses as a percentage of revenues decreased by 4%, as
compared to the same period 2011. However, the dollar amount spent on our general and administrative expenses remained relatively
consistent during the period. This consistency from 2012 to 2011 in dollars spent on general and administrative expenses is explained
by the following factors:



Factors
that increased general and administrative expenses during 2012, as compared to 2011:



| | (1) | Professional
                                                                                                                               fees
                                                                                                                               and
                                                                                                                               other
                                                                                                                               expenses
                                                                                                                               incurred
                                                                                                                               in
                                                                                                                               2012
                                                                                                                               in
                                                                                                                               connection
                                                                                                                               with
                                                                                                                               efforts
                                                                                                                               to
                                                                                                                               refinance
                                                                                                                               our
                                                                                                                               debt
                                                                                                                               obligations;
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



















| | (2) | Costs
                                                                                                                               incurred
                                                                                                                               to
                                                                                                                               hire
                                                                                                                               outside
                                                                                                                               consultants
                                                                                                                               to
                                                                                                                               manage
                                                                                                                               and
                                                                                                                               oversee
                                                                                                                               our
                                                                                                                               human
                                                                                                                               resources
                                                                                                                               and
                                                                                                                               investor
                                                                                                                               relations
                                                                                                                               activities;
                                                                                                                               and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Costs
                                                                                                                               incurred
                                                                                                                               in
                                                                                                                               order
                                                                                                                               to
                                                                                                                               employ
                                                                                                                               and
                                                                                                                               retain
                                                                                                                               experienced
                                                                                                                               personnel
                                                                                                                               to
                                                                                                                               meet
                                                                                                                               corporate
                                                                                                                               management
                                                                                                                               and
                                                                                                                               staff
                                                                                                                               needs;
                                                                                                                               which
                                                                                                                               included
                                                                                                                               increased
                                                                                                                               salary,
                                                                                                                               benefits,
                                                                                                                               and
                                                                                                                               bonus
                                                                                                                               expenses
                                                                                                                               during
                                                                                                                               the
                                                                                                                               period.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Factors
that decreased general and administrative expenses during 2012, as compared to 2011:



| | (1) | Termination
                                                                                                                               of
                                                                                                                               a
                                                                                                                               key
                                                                                                                               corporate
                                                                                                                               employee
                                                                                                                               during
                                                                                                                               early
                                                                                                                               2012
                                                                                                                               which
                                                                                                                               resulted
                                                                                                                               in
                                                                                                                               decreased
                                                                                                                               salary
                                                                                                                               and
                                                                                                                               wages
                                                                                                                               expense
                                                                                                                               for
                                                                                                                               2012;
                                                                                                                               and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Elimination
                                                                                                                                      of
                                                                                                                                      non-cash
                                                                                                                                      expenses
                                                                                                                                      for
                                                                                                                                      stock
                                                                                                                                      options
                                                                                                                                      granted
                                                                                                                                      to
                                                                                                                                      terminated
                                                                                                                                      employees,
                                                                                                                                      primarily
                                                                                                                                      due
                                                                                                                                      to
                                                                                                                                      the
                                                                                                                                      termination
                                                                                                                                      of
                                                                                                                                      the
                                                                                                                                      key
                                                                                                                                      corporate
                                                                                                                                      employee
                                                                                                                                      noted
                                                                                                                                      above.
                                                                                                                                      (All
                                                                                                                                      future
                                                                                                                                      expenses
                                                                                                                                      associated
                                                                                                                                      with
                                                                                                                                      terminated
                                                                                                                                      employees
                                                                                                                                      were
                                                                                                                                      eliminated
                                                                                                                                      in
                                                                                                                                      the
                                                                                                                                      current
                                                                                                                                      period
                                                                                                                                      due
                                                                                                                                      to
                                                                                                                                      forfeiture
                                                                                                                                      or
                                                                                                                                      cancellation
                                                                                                                                      of
                                                                                                                                      the
                                                                                                                                      option
                                                                                                                                      agreements
                                                                                                                                      upon
                                                                                                                                      termination
                                                                                                                                      of
                                                                                                                                      the
                                                                                                                                      employees
                                                                                                                                      and
                                                                                                                                      all
                                                                                                                                      expenses
                                                                                                                                      related
                                                                                                                                      to
                                                                                                                                      any
                                                                                                                                      unvested
                                                                                                                                      stock
                                                                                                                                      options
                                                                                                                                      were
                                                                                                                                      reversed,
                                                                                                                                      resulting
                                                                                                                                      in
                                                                                                                                      a
                                                                                                                                      net
                                                                                                                                      decrease
                                                                                                                                      to
                                                                                                                                      general
                                                                                                                                      and
                                                                                                                                      administrative
                                                                                                                                      expense
                                                                                                                                      for
                                                                                                                                      2012.)
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-----------------------------------------------------------------------------------------------------------------------------------------------





Depreciation
and Amortization:



Our
depreciation and amortization expenses decreased as a percentage of revenues for 2012, as compared to 2011, by approximately 7%,
or a decrease in depreciation and amortization expense of approximately $1.2 million or 29%.During
the second quarter of 2012, the Company reassessed the estimated useful lives of its trucks and equipment (including its well
servicing units and equipment, fluid services equipment, construction equipment, and other vehicles) as well as the estimated
useful lives of its disposal wells. Through this assessment, the Company increased the useful lives of its trucks and equipment
and of its disposal wells. This change in accounting estimate decreased depreciation for 2012 by approximately $2.6 million (pre-tax
difference), as compared to 2011. This decrease in depreciation for 2012 due to the change in accounting estimate noted above
was offset by an increase in depreciation by approximately $1.4 million due to property and equipment
purchases during fiscal year 2011 of approximately $5.6 million and another $4.2 million in purchases during 2012 (purchase amounts
include leases of approximately $282,000 and $438,000, respectively).



Results
of Operations:



For
2012, the Company recognized income from operations of approximately $1.7 million. For the same period in 2011, the Company recognized
a loss from operations of approximately $1.6 million. As discussed within the Cost of Revenues and Gross Profit, General
and Administrative Expenses, and Depreciation and Amortization sections above, the approximate $3.3 million positive
swing in our results from operations during 2012, as compared to 2011, was primarily a result of an approximate $7.6 million or
32% increase in revenues, with the cost of revenues from continuing operations as a percentage of revenues remaining relatively
consistent year-over-year, and an approximate $1.2 million or 29% decrease in depreciation expense.



Management
believes that this improvement in our results of operations reflects the beneficial effect of our expanded and increased operations
(as discussed throughout this report), a focus on obtaining profitability, and the benefit of the colder weather in the first
and last quarters of the year. We believe that as long as we are able to control our costs and increase our revenues as a result
of our expanding geographical regions and service areas, our financial performance will continue to improve over the long run,
although on a quarter-to-quarter basis, there may still be periods of loss due to the seasonality of our operations, as discussed
several times herein.



















Our
operations in 2011 and early 2012 were negatively impacted by unseasonably warm weather which reduced our operating cash flows
and limited our available working capital. Our new lending arrangements achieved in November 2012 have led toward greater operational
flexibility. This has enabled Enservco to acquire more equipment and continue to expand its operations. That, plus improved weather
for Enservco’s operations during the first half of calendar year 2013, have led to an improvement in current assets ($9.6
million at December 31, 2012 as compared to $12.5 million at June 30, 2013) and working capital ($1.5 million at December 31,
2012 and $7.8 million at June 30, 2013). This compares favorably to negative working capital reflected on Enservco’s balance
sheets for September 30, 2012 ($595,000) and December 31, 2011 ($2.7 million).



At
June 30, 2013, we had approximately $5.7 million of cash and cash equivalents and approximately $1.8 million available under our
asset based, revolving credit facility. Cash generated from operations during the first six months of our 2013 fiscal year has
significantly improved our working capital situation. Based on our existing operating performance, coupled with the November 2012
refinancing, we believe we will have adequate funds to meet operational and capital expenditure needs for the remainder of fiscal
year 2013 and beyond. However, if our estimates about our future operating performance turn out to be inaccurate, or if we are
unable to raise additional capital in the absence of positive future operating performance, the Company will adjust its capital
expenditures accordingly.



Income
Taxes:



For
2012, the Company recognized income from continuing operations before taxes of approximately $830,000. The Company recognized
a tax expense on this income from continuing operations of approximately $430,000. This resulted in an effective tax rate on income
from continuing operations of approximately 52%. This high effective tax rate, as compared to a generally expected corporate tax
rate of 34%, is primarily due to permanent book income vs. taxable income differences and state and local income tax. SeeNote
13 Taxes on Income from Continuing Operations in the notes to the consolidated financial statements within the Form 10K
filed on March 28, 2013.



Discontinued
Operations:



During
the year ended December 31, 2012, the Company made the decision to discontinue its Heat Waves’ well-site construction and
roustabout line of service. The Company, in accordance with US GAAP, has delineated all results of operations as continuing operations
or discontinued operations, from the well-site construction and roustabout line of service, for the years ending December 31,
2012 and 2011. As such, the operating results of this line of service are reported as Loss on discontinued operations, net
of tax in our consolidated statements of income for all periods presented. As permitted under US GAAP, the Company has elected
to not separately disclose cash flows pertaining to discontinued operations within the accompanying statements of cash flows for
the years ending December 31, 2012 and 2011.













The
following table provides the components, as presented in our consolidated statements of income, of discontinued operations, net
of tax:



|                                                |  | For
    the Years Ended
|----------------------------------------------- |  | -----------------------
|                                                |  | December
    31,       
|                                                |  | 2012                   
|                                                |  |                        
|Revenues                                        |  | $                      
|Cost
    of Revenue                             |  |                        
|                                                |  |                        
|Gross
    Profit                                |  |                        
|                                                |  |                        
|Operating
    Expenses                          |  |                        
|Depreciation
    and amortization               |  |                        
|                                                |  |                        
|Loss
    from Operations                        |  |                        
|                                                |  |                        
|Other
    Expense                               |  |                        
|Interest
    expense                            |  |                        
|                                                |  |                        
|Loss
    from discontinued operations           |  |                        
|Income
    tax benefit                          |  |                        
|Loss
    on discontinued operations, net of tax |  | $                      





Overall
discussion of the declining Revenues, Profitability, and Results of Operations, and the increasing Cost of Revenue from Discontinued
Operations:



During
2011, Heat Waves’ construction division, which operates Heat Waves’ well-site construction and roustabout line of
service, was dispatched out of our Garden City, Kansas location. Due to the declining revenues and profitability at this location,
due to a significant decrease in the number of new wells being drilled in the Garden City area (revenues were primarily generated
from construction and maintenance of new well pads, well lease roads, etc.), the construction assets were redeployed to our North
Dakota location; located in the Killdeer, ND area to service the Bakken Shale formation.



Throughout
the spring and early summer of 2012, as our equipment sat idle, the Company reassessed its ability to capture the desired and
expected market share, and determined that the demand for construction crews in the ND area had decreased significantly since
Heat Waves’ redeployed its assets to the ND area, as compared to preliminary forecasts, due to the number of construction
companies that flooded the ND area soon after Heat Waves’ arrival.



Due
to the inability to capture the early market share and the overall limited construction contracts awarded by E&P
operators, Heat Waves was unable to realize the forecasted revenues and gross margins to make its construction division
profitable, and due to the lack of profitable alternatives, decided to exit the well-site construction and roustabout line of
service completely and focus its efforts and capital on its frac heating, hot oiling, and water hauling divisions. As such,
in December 2012 plans were initiated to close the North Dakota construction operations and sell off all of Heat Waves’
owned construction equipment to third parties.

















Depreciation
and Amortization from Discontinued Operations:



The
depreciation expense from discontinued operations was associated with the fixed assets (trucks and equipment) utilized
within the Heat Waves construction division, which operates Heat Waves’ well-site construction and roustabout line of
service. As discussed above,during the second quarter of 2012,
the Company reassessed the estimated useful lives of its trucks and equipment (including its construction equipment). Through
this assessment, the Company increased the useful lives of its trucks and equipment. This change in accounting estimate
decreased depreciation on Heat Waves’ construction division for 2012 by approximately $380,000 (pre-tax difference), as
compared to 2011. Though the construction division leased trucks and equipment (through operating leases) to meet customer
demand, as discussed above, Heat Waves’ did not purchase a significant amount of new trucks and equipment to be
utilized within its construction division; see the major classes of assets and liabilities from
discontinued operations table and discussion below, and Note 6 in the notes to the consolidated financial statements
within the Form 10K filed on March 28, 2013 for further details.



As
part of the Company’s decision to discontinue its Heat Waves’ well-site construction and roustabout line of service,
the Company had the intent and made plans during 2012 to sell off the trucks and equipment used in this line of service. As such,
in accordance with US GAAP, the Company has classified these fixed assets as Fixed assets held for sale in our consolidated
balance sheet as of December 31, 2012; see Note 6in the notes to
the consolidated financial statements within the Form 10K filed on March 28, 2013 for further details. In accordance with US GAAP,
as permitted, the Company elected to present and disclose all other major classifications of assets and liabilities associated
with these discontinued operations, other than the Fixed assets held for sale, within the notes to the financial statements.



The
following table provides the major classes of assets and liabilities from discontinued operations, as of:



|                                         |  | December 31,
|---------------------------------------- |  | ------------
|                                         |  | 2012        
|                                         |  |             
|Accounts Receivable                      |  | $           
|Fixed Assets Held for Sale, net          |  |             
|                                         |  |             
|Total Discontinued Assets                |  | $           
|                                         |  |             
|                                         |  |             
|Accounts payable and accrued liabilities |  |             
|                                         |  |             
|Total Discontinued Liabilities           |  | $           



















Fixed
Assets Held for Sale



The
2012 and 2011 balances within Fixed Assets Held for Sale in the table above represent trucks and equipment association with Heat
Waves’ well-site construction and roustabout line of service. See Note 6in
the notes to the consolidated financial statements within the Form 10K accompanying thisreport for
further details.



Accounts
Receivable



The
2012 and 2011 balances within Accounts Receivable in the table above represent trade accounts receivable recorded in association
with Heat Waves’ well-site construction and roustabout line of service. These receivable balances were deemed fully collectible
by the Company and no significant allowance for doubtful accounts was associated with these accounts receivable balances at December
31, 2012 and 2011.



Accounts
Payable



The
2012 and 2011 balances within Accounts Payable in the table above represent trade accounts payable recorded in association with
Heat Waves’ well-site construction and roustabout line of service. During 2012, the majority of these payable balances were
amounts owed on the leased construction equipment.



Adjusted
EBITDA*:



Management
believes that, for the reasons set forth below, adjusted EBITDA (even though 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 to our Adjusted EBITDA for each of the periods indicated:





|                                              |  |   |                          |   |  |   |            |  
|--------------------------------------------- |  | - | ------------------------ | - |  | - | ---------- | -
|                                              |  |   | Years Ended December 31, |  
|                                              |  |   | 2012                     |   |  |   | 2011       |  
|EBITDA* From Continuing Operations:           |  |   |                          |   |  |   |            |  
|Income (Loss) From Continuing Operations      |  | $ | 401,488                  |   |  | $ | (1,597,810 | )
|Add (Deduct):                                 |  |   |                          |   |  |   |            |  
|Interest expense                              |  |   | 902,152                  |   |  |   | 699,230    |  
|Income tax expense (benefit)                  |  |   | 426,779                  |   |  |   | (897,923   | )
|Depreciation and amortization                 |  |   | 2,960,153                |   |  |   | 4,188,052  |  
|EBITDA* From Continuing Operations            |  |   | 4,690,572                |   |  |   | 2,391,549  |  
|Add (Deduct):                                 |  |   |                          |   |  |   |            |  
|Stock-based compensation                      |  |   | 279,362                  |   |  |   | 576,498    |  
|Warrants issued                               |  |   | —                        |   |  |   | 46,353     |  
|Loss on disposal of equipment                 |  |   | 5,739                    |   |  |   | 119,023    |  
|Gain on sale of investments                   |  |   | (24,653                  | ) |  |   | —          |  
|Other (income) expense                        |  |   | (10,870                  | ) |  |   | 49,765     |  
|Adjusted EBITDA* From Continuing Operations   |  | $ | 4,940,150                |   |  | $ | 3,183,188  |  
|                                              |  |   |                          |   |  |   |            |  
|                                              |  |   |                          |   |  |   |            |  
|EBITDA* From Discontinued Operations:         |  |   |                          |   |  |   |            |  
|Loss From Discontinued Operations             |  | $ | (486,558                 | ) |  | $ | (369,446   | )
|Add (Deduct):                                 |  |   |                          |   |  |   |            |  
|Interest expense                              |  |   | 1,770                    |   |  |   | 7,714      |  
|Income tax benefit                            |  |   | (311,078                 | ) |  |   | (236,204   | )
|Depreciation and amortization                 |  |   | 128,935                  |   |  |   | 511,588    |  
|EBITDA* From Discontinued Operations          |  |   | (666,931                 | ) |  |   | (86,348    | )
|Add (Deduct):                                 |  |   |                          |   |  |   |            |  
|Stock-based compensation                      |  |   | —                        |   |  |   | —          |  
|Warrants issued                               |  |   | —                        |   |  |   | —          |  
|Loss on disposal of equipment                 |  |   | —                        |   |  |   | —          |  
|Gain on sale of investments                   |  |   | —                        |   |  |   | —          |  
|Other (income) expense                        |  |   | —                        |   |  |   | —          |  
|Adjusted EBITDA* From Discontinued Operations |  | $ | (666,931                 | ) |  | $ | (86,348    | )



*Note: See
discussion to follow below for use of non-GAAP financial measurements.

















Use
of Non-GAAP Financial 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). 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 within the schedules attached herein.



EBITDA
is defined as net income plus interest expense, income taxes, and depreciation and amortization.Adjusted EBITDA excludes from EBITDA stock-based compensation and, when appropriate, other items that management does not utilize
in assessing the Company’s operating performance (see list of these items to follow below). None of these non-GAAP financial
measures are recognized terms under GAAP and do not purport to be an alternative to net income as an indicator of operating performance
or any other GAAP measure. Management uses these non-GAAP measures in its operational and financial decision-making, believing
that it is useful to eliminate certain items in order to focus on what it deems to be a more reliable indicator of ongoing operating
performance and the company’s ability to generate cash flow from operations. Management also believes that investors may
find non-GAAP financial measures useful for the same reasons, although investors are cautioned that non-GAAP financial measures
are not a substitute for GAAP disclosures.



All
of the items included in the reconciliation from Net Income to EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash
items (e.g., depreciation, amortization of purchased intangibles, stock-based compensation, warrants issued, etc.) or (ii) items
that management does not consider to be useful in assessing the Company’s operating performance (e.g., income taxes, gain
on sale of investments, loss on disposal of assets, 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.



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*



For
2012, Adjusted EBITDA From Continuing Operations increased by approximately $1.8 million and Adjusted EBITDA Loss From Discontinued
Operations increased by approximately $580,000, as compared to 2011.



The
increase of Adjusted EBITDA From Continuing Operations during 2012, as compared to 2011, was primarily due to an increase in revenues
from our well enhancement services within our Rocky Mountain and Central USA regions, due to new frac heating and hot oiling customers
in those regions.



The
increase to Adjusted EBITDA Loss From Discontinued Operations during 2012, as compared to 2011, was primarily due to the decline
in revenues in 2012, as the construction division sat idle for many months in North Dakota waiting out the winter freeze and spring
thaw laws and the Company was unable to enter into any long-term contracts until the end of the summer of 2012. The decline was
also due to the increase in cost of revenues associated with leasing equipment to meet customer demands and for transporting the
heavy construction equipment to North Dakota when the construction division assets were redeployed in first quarter of 2011.



Liquidity
and Capital Resources:



The
following table summarizes our statements of cash flows for the years ended December 31, 2012 and 2011 and (combined
with the working capital table and discussion below) is important for understanding our liquidity:



|                                                     |  | Years Ended December 31,
|---------------------------------------------------- |  | ------------------------
|                                                     |  | 2012                    
|                                                     |  |                         
|                                                     |  |                         
|Net cash provided from operating activities          |  | $                       
|Net cash used in investing activities                |  |                         
|Net cash provided from financing activities          |  |                         
|Net Increase (Decrease) in Cash and Cash Equivalents |  |                         
|                                                     |  |                         
|Cash and Cash Equivalents, Beginning of Period       |  |                         
|                                                     |  |                         
|Cash and Cash Equivalents, End of Period             |  | $                       



Note: As discussed
within Note 1 – Basis of Presentation within the Notes to the Consolidated Financial Statements, the Company has elected
to not separately disclose cash flows pertaining to discontinued operations within the accompanying statements of cash flows for
the years ending December 31, 2012 and 2011.



The following table sets
forth a summary of certain aspects of our balance sheets at December 31, 2012 and 2011:



|                                                            |  | Years Ended December 31,
|----------------------------------------------------------- |  | ------------------------
|                                                            |  | 2012                    
|                                                            |  |                         
|                                                            |  |                         
|Current Assets                                              |  | $                       
|Total Assets (including assets of discontinued operations)  |  |                         
|Current Liabilities                                         |  |                         
|Total Liabilities                                           |  |                         
|Working Capital (Current Assets net of Current Liabilities) |  |                         
|Stockholders’ equity                                        |  |                         

















Note: As discussed within Note 1 – Basis
of Presentation within the Notes to the Consolidated Financial Statements, the Company has classified fixed assets associated
with discontinued operations as Fixed assets held for sale in our consolidated balance sheet as of December 31, 2012. The
Company elected to present and disclose all other major classifications of assets and liabilities associated with these discontinued
operations, other than the Fixed assets held for sale, within the notes to the financial statements; see Note 3 within the Notes
to the Consolidated Financial Statements for further details.





In
current and prior periods, we have relied on cash generated from operations and borrowings under our credit facility to satisfy
our liquidity needs. Our ability to fund operating cash flow shortfalls, fund capital expenditures, and make acquisitions will
depend upon our future operating performance, and more broadly, on the availability of equity and debt financing, of which there
can be no assurance and which will be affected by prevailing economic conditions in our industry and financial, business and other
factors, some of which are beyond our control. At December 31, 2012, we had approximately $2.8 million available under our
asset based, revolving credit facility (approximately $1.8 million available at June 30, 2013).



As
noted within Footnote 8 to the Consolidated Financial Statements as disclosed within the Form 10K, onNovember
2, 2012, the Company and PNC Bank, National Association (“PNC”) entered into a Credit Agreement and other documents
by which the Company and its subsidiaries refinanced substantially all of its existing indebtedness with Great Western Bank.This refinancing has positively bolstered our working capital position, as well as provided for an increased revolving
credit facility. Based on our existing operating performance, coupled with the recentrefinancing,
we believe we will have adequate funds to meet operational and capital expenditure needs for fiscal
year 2013 and beyond. However, if our estimates about our future operating performance turn out to be inaccurate, or if we are
unable to raise additional capital in the absence of positive future operating performance, the Company will adjust its capital
expenditures accordingly.



The
PNC credit facility includes a $5.0 million revolving credit facility and an $11.0 million term loan facility. Advances under
both the revolving and term loans may incur interest based upon an effective Eurodollar rate or alternate base rate for domestic
loans. As of December 31, 2012, all loan advances under both the revolving credit facility and term facility bear interest based
upon the Eurodollar rate.



The
revolving credit facility has a variable rate interest of 3.25% plus the one month Libor and is secured with inventory and accounts
of the company. The revolving credit facility also has a facility fee of .375% per annum, which is applied to any undrawn portion
of the maximum revolving advance amount. The term loan has a variable interest of 4.25% plus one month Libor and is collateralized
by equipment, inventory, and accounts of the Company,



The
PNC credit facility has certain customary financial covenants that include, among others, (i) an annual limit on capital expenditures,
(ii) a minimum fixed charge coverage ratio, and (iii) a minimum tangible net worth.



The
minimum tangible net worth covenant is set annually by the lender based upon financial projections of the company and is
measured on a quarterly basis. For 2012, the minimum tangible net worth requirement is $3,750,000 and for 2013 the covenant
requirement ranges from $4,244,000 to $5,114,000. Enservco and the lender will determine the 2014 covenant amounts after
Enservco submits its 2014 financial projections to the lender.

















The
fixed charge coverage ratio must be not less than 1.1:1, measured as of the last day of each fiscal quarter, and must be determined
based on trailing twelve month information. The agreement defines the fixed charge coverage ratio to be the ratio of (a) adjusted
EBITDA for such period minus (i) unfinanced capital expenditures made during such period and (ii) cash taxes paid during such
period to (b) all senior debt payments during such period.



These
financial covenants require the Company to meet certain future liquidity requirements and could restrict our ability to secure
additional debt financing or access funds under our revolving credit facility.



As
of December 31, 2012 we had working capital of approximately $1.6 million, an increase in working capital of approximately $4.3
million as compared to our 2011 fiscal year end. There were various components contributing to the 2012 increase in the working
capital:



Factors
that increased our working capital –



| | 1. | An
                                                                                                                               increase
                                                                                                                               in
                                                                                                                               accounts
                                                                                                                               receivable
                                                                                                                               balances
                                                                                                                               of
                                                                                                                               approximately
                                                                                                                               $3.3
                                                                                                                               million
                                                                                                                               due
                                                                                                                               to
                                                                                                                               an
                                                                                                                               approximate
                                                                                                                               $5.1
                                                                                                                               million
                                                                                                                               increase
                                                                                                                               in
                                                                                                                               fourth
                                                                                                                               quarter
                                                                                                                               2012
                                                                                                                               revenues
                                                                                                                               as
                                                                                                                               compared
                                                                                                                               to
                                                                                                                               the
                                                                                                                               same
                                                                                                                               period
                                                                                                                               in
                                                                                                                               2011.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | A
                                                                                                                               decrease
                                                                                                                               in
                                                                                                                               the
                                                                                                                               current
                                                                                                                               portion
                                                                                                                               of
                                                                                                                               the
                                                                                                                               long-term
                                                                                                                               debt
                                                                                                                               of
                                                                                                                               approximately
                                                                                                                               $1.6
                                                                                                                               million
                                                                                                                               due
                                                                                                                               to
                                                                                                                               the
                                                                                                                               refinancing
                                                                                                                               of
                                                                                                                               our
                                                                                                                               Term
                                                                                                                               Loan
                                                                                                                               with
                                                                                                                               PNC
                                                                                                                               Business
                                                                                                                               Credit
                                                                                                                               on
                                                                                                                               November
                                                                                                                               2,
                                                                                                                               2012.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





Factors
that had a negative effect on our working capital –





| | 1. | A decrease in inventories of approximately $275,000 due tothe Company closing its yard in the Uintah basin in northeastern Utah that included an acidizing operation that utilized inventory of acid and chemicals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | 2. | An
                                                                                                                               increase
                                                                                                                               in
                                                                                                                               accounts
                                                                                                                               payable
                                                                                                                               and
                                                                                                                               accrued
                                                                                                                               bonuses
                                                                                                                               of
                                                                                                                               approximately
                                                                                                                               $630,000
                                                                                                                               directly
                                                                                                                               related
                                                                                                                               to
                                                                                                                               the
                                                                                                                               significant
                                                                                                                               increases
                                                                                                                               in
                                                                                                                               well
                                                                                                                               enhancement
                                                                                                                               revenues
                                                                                                                               during
                                                                                                                               the
                                                                                                                               fourth
                                                                                                                               quarter
                                                                                                                               of
                                                                                                                               2012
                                                                                                                               as
                                                                                                                               compared
                                                                                                                               to
                                                                                                                               the
                                                                                                                               same
                                                                                                                               period
                                                                                                                               in
                                                                                                                               2011;
                                                                                                                               and



| | 3. | A
                                                                                                                               decrease
                                                                                                                               in
                                                                                                                               marketable
                                                                                                                               securities
                                                                                                                               of
                                                                                                                               approximately
                                                                                                                               $150,000
                                                                                                                               due
                                                                                                                               to
                                                                                                                               the
                                                                                                                               sale
                                                                                                                               of
                                                                                                                               securities
                                                                                                                               at
                                                                                                                               approximately
                                                                                                                               $180,000,
                                                                                                                               offset
                                                                                                                               by
                                                                                                                               the
                                                                                                                               gain
                                                                                                                               on
                                                                                                                               the
                                                                                                                               sale
                                                                                                                               of
                                                                                                                               these
                                                                                                                               securities
                                                                                                                               by
                                                                                                                               approximately
                                                                                                                               $30,000.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Investing
and Financing Activities







Our
capital expenditures for 2012 were approximately $4.2 million, as compared to approximately $5.6 million during 2011 (purchase
amounts include leases of approximately $438,000 and $282,000, respectively). Also, in order to fund some of our capital expenditures
we sold some of our marketable securities during the first six months of 2012 resulting in proceeds of approximately $180,000.
During 2012, we disposed of obsolete or retired trucks and equipment resulting in proceeds of approximately $530,000, and also
sold two properties from our Utah operations center, located in the Uintah basin, for combined cash proceeds of $625,000. These
items, combined, explain the significant decrease of approximately $2.5 million in the cash used in investing activities during
2012, as compared to 2011.























On
November 2, 2012, the Company refinanced its Term Loan debt and its revolving line of credit through PNC Business Credit. As part
of the additional, private equity placement in November 2012, pursuant to the PNC Credit Facility, the Company received cash proceeds
from the issuance of stock of approximately $2.0 million. The Company had net proceeds from the issuance of long-term debt (i.e.
net of long-term debt repayments) of approximately $480,000. The Company also had net payments on its line of credit of approximately
$100,000. These items, combined, explain the significant increase of approximately $1.5 million in the cash provided from financing
activities during 2012, as compared to 2011.



As
of December 31, 2011 we had outstanding purchase orders of approximately $500,000 for heating and other units to meet the demand
of our customers. We purchased this equipment in the first and second quarters of 2012. As of December 31, 2012 we have executed
commitments for approximately $900,000 for additional heating equipment. A majority of these assets were purchased and delivered
as of the date of this filing.



Capital
Commitments and Obligations



The
Company’s capital commitments and obligations as of December 31, 2012 consisted of the PNC Term Loan, the PNC Revolving
Line of Credit, a Great Western Bank Real Estate Loan entered into to fund the new operation center in North Dakota, as well as
other bank debt and certain capital and operating leases.  General terms and conditions for, and amounts due under, these
commitments and obligations are summarized in the notes to the financial statements.  Although all these obligations are
not obligations of Enservco itself, as of the date of this report they are obligations and commitments of the Company on a consolidated
basis and may affect the Company’s liquidity and financial obligations going forward.



Going
forward, and subject to the availability of adequate financing, the Company hopes to expand its business operations by acquiring
additional equipment, increasing the volume of services we currently offer, expanding the services we offer to our customers,
and engaging in strategic transactions with companies that offer services that are similar or complementary to those that the
Company offers.



Management
has taken various preliminary steps to explore geographical and service offering expansion. To fully implement certain of these
activities the Company likely will need to raise additional capital or borrow funds from its existing lender(s) or from other
third parties. The Company believes that it can utilize cash flows, its existing line of credit, and remaining equipment and other
loan balances to finance its current plans. However, should the Company desire to engage in certain strategic transactions or
other significant expansions of its business operations it will likely have to obtain outside financing. There can be no assurance
that financing will be available to the Company on reasonable terms, if at all.



Off-balance
Sheet Arrangements





Other
than the guarantees made by Enservco (as the parent Company) and by Mr. Herman on various loan agreements, the Company 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.

















Critical
Accounting Policies



The
preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make
a variety of estimates and assumptions that affect (i) the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities as of the date of the financial statements, and (ii) the reported amounts of revenues and expenses during
the reporting periods covered by the financial statements.



Our
management routinely makes judgments and estimates about the effect of matters that are inherently uncertain. As the number of
variables and assumptions affecting the future resolution of the uncertainties increase, these judgments become even more subjective
and complex. Although we believe that our estimates and assumptions are reasonable, actual results may differ significantly from
these estimates. Changes in estimates and assumptions based upon actual results may have a material impact on our results of operation
and/or financial condition. Our significant accounting policies are disclosed in Note 2 to the Financial Statements included in
this Form 10-K.



While
all of the significant accounting policies are important to the Company’s financial statements, the following accounting
policies and the estimates derived there from have been identified as being critical.



Accounts
Receivable:



Accounts
receivable are stated at the amount billed to customers. The Company provides a reserve for doubtful accounts based on a review
of outstanding receivables, historical collection information and existing economic conditions. The provision for uncollectible
amounts is continually reviewed and adjusted to maintain the allowance at a level considered adequate to cover future losses.
The allowance is management's best estimate of uncollectible amounts and is determined based on historical performance that is
tracked by the Company on an ongoing basis. The losses ultimately incurred could differ materially in the near term from the amounts
estimated in determining the allowance.



Inventory:



Inventory
consists primarily of diesel fuel and chemicals that are used in the servicing of oil wells and is carried at the lower of cost
or market in accordance with the first in, first out method. The company periodically reviews the value of items in inventory
and provides write-downs or write-offs of inventory based on its assessment of market conditions. Write-downs and write-offs are
charged to cost of goods sold.



Property
and Equipment:



Property
and equipment consists of (1) trucks, trailers and pickups; (2) trucks that are in various stages of fabrication; (3) real property
which includes land and buildings used for office and shop facilities and wells used for the disposal of water; and (4) other
equipment such as tools used for maintaining and repairing vehicles, office furniture and fixtures, and computer equipment. Property
and equipment is stated at cost less accumulated depreciation. 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 of the assets.
Depreciation is recorded on a straight-line basis over estimated useful lives of 5 to 30 years.

















During
fiscal year 2012, the Company reassessed the estimated useful lives of its trucks and equipment (including its well servicing
units and equipment, fluid services equipment, construction equipment, and other vehicles) as well as the estimated useful lives
of its disposal wells. Through this assessment, the Company increased the useful lives of its trucks and equipment from 5-7 years
to 10 years, and increased the useful lives of its disposal wells from 7-10 years to 15 years. The Company has determined that
this adjustment to its useful lives is a change in accounting estimate and has accounted for the change prospectively; i.e. the
accounting change impacts interim reporting periods within fiscal year 2012 and future periods. For the twelve months ended December
31, 2012, the change in accounting estimate decreased depreciation for the period by approximately $2.6 million (pre-tax difference),
decreasing Loss from Operations and Net Loss by this amount, or by approximately $0.11 earnings per basic and diluted common share,
respectively.



Long-Lived
Assets:



The
Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount
of the asset may not be recovered. The Company looks primarily to the discounted future cash flows in its assessment of whether
or not long-lived assets have been impaired. No impairments were recorded during the years ended December 31, 2012 or 2011.



Intangible
Assets:



Non-Competition
Agreements.The non-competition agreements with the sellers of Heat Waves and Dillco have finite lives and are being amortized
over the five-year contractual periods. Amortization expense is expected to be recognized through June 2013.



Goodwill.Goodwill represents the excess of the cost over the fair value of net assets acquired, including identified intangible
assets, recorded in connection with the acquisitions of Heat Waves. Goodwill is not amortized but is assessed for impairment at
least annually.



Impairment.The
Company assesses goodwill and intangible assets with indefinite lives for impairment at the reporting unit level on an annual
basis and between annual tests if events occur or circumstances change that would more likely than not reduce the fair value
below its carrying amount. Guidance allows a qualitative assessment of impairment to determine whether it is
more-likely-than-not that the intangible asset is impaired. If it is determined that it is more-likely-than-not that an
impairment exists, accounting guidance requires that the impairment test be performed through the application of a two-step
fair value test. The Company utilizes this method and recognizes a goodwill impairment loss in the event that the fair value
of the reporting unit does not exceed its carrying value. During fiscal years ending December 31, 2012 and 2011, the Company
performed the annual impairment test as of the date ending at each of these fiscal years and determined in both fiscal years
that no impairment existed.

















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 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.



The
Company accounts for any uncertainty in income taxes by recognizing the tax benefit from an uncertain tax position only if 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 consolidated balance sheets and consolidated statements of
income. The result of the reassessment of the Company’s tax positions did not have an impact on the consolidated financial
statements.



Interest
and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses. No interest
or penalties have been assessed as of December 31, 2012 or 2011. The Company files tax returns in the United States, in the states
of Colorado, Kansas, North Dakota, and Pennsylvania. The tax years 2009 through 2012 remain open to examination in the taxing
jurisdictions to which the Company is subject.



Fair
Value:



The
Company has adopted the 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) 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. The financial
and nonfinancial 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:	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.



Stock-based
Compensation:



The
Company uses the fair value method of accounting for stock-based compensation, where Stock-based compensation costs are measured
at fair value, determined using the stock price on the date of grant, and charged to expense over the requisite service period.



Loan
Fees and Other Deferred Costs:



In
the normal course of business, the Company often enters into loan agreements with its primary lending institutions. The majority
of these lending agreements require origination fees and other fees in the course of executing the agreements. For all costs associated
with the execution of the lending agreements, the Company recognizes these as capitalized costs and defers the expensing of these
costs over the term of the loan agreement using the effective interest method. These deferred costs are classified on the balance
sheet as current or long-term assets based on the contractual terms of the loan agreements.



Revenue
Recognition:



The
Company recognizes revenue when evidence of an arrangement exists, the fee is determinable, and services are provided and collection
is reasonably assured.

















PART IV.



ITEM
15. EXHIBITS



|Exhibit
    No. |  | Title                                                                                                                  
|--------------- |  | -----------------------------------------------------------------------------------------------------------------------
|                |  |                                                                                                                        
|3.01            |  | Second
    Amended and Restated Certificate of Incorporation of Aspen Exploration Corporation. (2)                     
|3.02            |  | Amended
    and Restated Bylaws. (3)                                                                                   
|10.01           |  | Employment
    Agreement between the Company and Michael D. Herman. (3)(6)                                             
|10.02           |  | Employment
    Agreement between the Company and Rick Kasch. (3)(5)(6)(7)                                              
|10.03           |  | Employment
    Agreement between the Company and Austin Peitz. Filed herewith.                                         
|10.04           |  | 2008
    Equity Plan. (4)                                                                                              
|10.05           |  | 2010
    Stock Incentive Plan. (3)                                                                                     
|10.06           |  | Business
    Loan Agreement with Great Western Bank. (3)                                                               
|10.07           |  | Business
    Loan Agreement with Great Western Bank. (3)                                                               
|10.08           |  | Form
    of Indemnity Agreement. (3)                                                                                   
|10.09           |  | Business
    Loan Agreement with PNC Bank. (8)                                                                         
|14.1            |  | Code
    of Business Conduct and Ethics Whistleblower Policy. (3)                                                      
|21.1            |  | Subsidiaries
    of Enservco Corporation. (3)                                                                          
|31.1            |  | Certification
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, (Principal Executive                      
|                |  | Officer). 
    Filed herewith.                                                                                         
|31.2            |  | Certification
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Principal Financial                       
|                |  | Officer). 
    Filed herewith.                                                                                         
|32.1            |  | Certification
    pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-                     
|                |  | Oxley
    Act of 2002 (Chief Executive Officer). Filed herewith.                                                       
|32.2            |  | Certification
    pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-                     
|                |  | Oxley Act of 2002 (Chief Financial
                                                           Officer). Filed herewith.

| |  | 
| |  | 

| |  | 
| |  | 

| |  | 
| |  | 

|(1) | Intentionally
                                                                            omitted.                                                                                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Incorporated
                                                           by reference from the Company’s Current Report on Form 8-K dated
                                                           December 30, 2010, and filed on January 4, 2011.

| | (3) | Incorporated
                                                           by reference from the Company’s Current Report on Form 8-K dated
                                                           July 27, 2010, and filed on July 28, 2010.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Incorporated
                                                           by reference from the Company’s Current Report on Form 8-K dated
                                                           February 27, 2008, and filed on March 10, 2008.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Incorporated
                                                           by reference from the Company’s Quarterly Report on Form 10-Q
                                                           for the quarter ended June 30, 2011, and filed on August 15, 2011.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Incorporated
                                                           by reference from the Company’s Current Report on Form 8-K dated
                                                           February 10, 2012, and filed on February 13, 2012.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | Incorporated
                                                           by reference from the Company’s Current Report on Form 8-K dated
                                                           June 6, 2012, and filed on June 11, 2012.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | Incorporated
                                                           by reference from the Company’s Current Report on Form 8-K dated
                                                           November 2, 2012, and filed on November 8, 2012.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



















SIGNATURES





In
accordance with Section 13 or 15(d) of the Securities Exchange Act 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

|                |                                                               
|--------------- | --------------------------------------------------------------
|October 7, 2013 |                                                               
|                |                                                               
|                | ENSERVCO
    CORPORATION,                                     
|                | a
    Delaware Corporation                                    
|                |                                                               
|                | /s/
    Michael D. Herman                                     
|                | Principal
    Executive Officer                               
|                |                                                               
|                | /s/
    Robert Devers                                         
|                | Principal
    Financial Officer & Principal Accounting Officer