Deep Down Announces 120% Increase in Revenue HOUSTON, April 1, 2008 /PRNewswire-FirstCall/ -- Deep Down, Inc., a Nevada corporation (OTC Bulletin Board: DPDW), today announced it has filed its Form 10-KSB for the period ending December 31, 2007, with the Securities and Exchange Commission. Under purchase accounting rules, the financial results of operations for 2006 include the operations of Deep Down only for the period beginning November 21, 2006 and ending December 31, 2006, the period after which its Deep Down (Delaware) subsidiary was acquired. During this period in 2006, Deep Down reported revenues of $978,047. In order to present a more complete view of full-year operations for Deep Down during 2006 and to present more meaningful comparable results, management also presented unaudited pro forma consolidated results of operations for 2006 as if the acquisition of Deep Down had occurred on January 1, 2006. The discussion below compares audited financial information for the fiscal year ended December 31, 2007 with unaudited pro forma financial information for the year ended December 31, 2006.
Revenue for the year ended December 31, 2007, was $19,389,730, an increase of $10,568,581 or 119.8%, compared to revenue of $8,821,149 for the comparable period in 2006. Gross profit for 2007 was $6,369,361, an increase of $2,703,611 or 73.8%, compared to gross profit of $3,665,750 for 2006. Gross profit dropped from 41.6% to 32.8%, primarily as the result of increased expenses associated with the development of new products during the year. Management expects margins to improve with wider acceptance of these recent product introductions. Operating income for 2007 was $1,657,844 for 2007, an increase of $3,868,886 compared to a loss of $2,211,042 for the comparable period in 2006. Net income for 2007 was $952,509, an increase of $3,764,136 compared to a loss of $2,811,627 for the comparable period in 2006.
Deep Down uses EBITDA as an unaudited supplemental financial measure to assess the financial performance of its assets without regard to financing methods, capital structure, taxes or historical cost basis. The Company defines EBITDA as net income plus interest expense, income taxes, depreciation, amortization and other non-cash, non-operating expense. The term EBITDA is not defined under generally accepted accounting principles, and EBITDA is not presented as an alternative measure of operating results or cash flow from operations. EBITDA does not give effect to cash used for debt service requirements, and thus, does not reflect funds available for investment, distributions or other discretionary uses. When assessing Deep Down's operating performance or liquidity, investors and others should not consider this data in isolation or as a substitute for net income, cash flow from operating activities, or other cash flow data calculated in accordance with generally accepted accounting principles. However, Deep Down also understands that such data are used by some investors, equity analysts, and others to make informed investment decisions. EBITDA is used as an analytical indicator of income generated to service debt and fund capital expenditures. In addition, multiples of current or projected EBITDA are used to estimate current or projected enterprise value. EBITDA for 2007 was $2,272,202, up 43.0% compared to $1,296,218 for 2006.
'Our management team is extremely proud of our first full year's results of operations as a public company. The income statement is primarily reflective of growth in our core operations and includes only one month of financial results for our most recent acquisition, Mako Technologies. We expect the full impact of this acquisition to manifest itself in future periods,' commented Robert E. Chamberlain, Jr., Deep Down's Chairman and Chief Acquisitions Officer. 'We are committed to the continued fulfillment of our strategic acquisition objectives to position Deep Down as a preferred provider of services and products in support of deepwater exploration, development and production of oil and gas, and other maritime operations,' Chamberlain added.
'Our significant revenue growth is reflective of Deep Down's commitment to offer innovative services, products, and solutions to support major oil and gas operators, installation contractors, and umbilical and control suppliers in their continual effort to enhance the progression and completion of major offshore oil and gas exploration and production projects. Our goal is to deliver innovative solutions to our customers quicker, more cost-effectively, and more safely. We are also focused on protecting our innovations more effectively as we venture into the uncharted frontier of deeper water,' commented Ronald E. Smith, Deep Down's President and Chief Executive Officer.
'We are particularly proud of the balance sheet improvements experienced during 2007. We have simplified the capital structure by redeeming for cash or exchanging for common stock various series of preferred stock. Deep Down experienced significant balance sheet improvements over the period with an increase in shareholders' equity of $15.9 million. This dramatic increase does not reflect the recent conversion of the Series D Preferred Stock or the final payment for the Mako acquisition. We believe our liquidity to be healthy as well. Compared to the prior period, our accounts receivable have increased by $5.9 million to $7.2 million. Our accounts payable have only increased by $2.8 million to $3.6 million. We will continue to focus on simplifying the capital structure, reducing capital costs, and positioning the company to finance future acquisitions,' said Eugene L. Butler, Deep Down's Chief Financial Officer.
About Deep Down, Inc.
Deep Down specializes in the provision of innovative solutions, installation management, engineering services, support services, custom fabrication and storage management services for the offshore subsea control, umbilical, and pipeline industries. The company fabricates component parts of subsea distribution systems and assemblies that specialize in the development of subsea fields and tie backs. These items include umbilicals, flow lines, distribution systems, pipeline terminations, controls, winches, and launch and retrieval systems, among others. Deep Down provides these services from the initial field conception phase, through manufacturing, site integration testing, installation, topside connections, and the final commissioning of a project.
The Company's ElectroWave subsidiary offers products and services in the fields of electronic monitoring and control systems for the energy, military, and commercial business sectors. ElectroWave designs, manufactures, installs, and commissions integrated PLC and SCADA based instrumentation and control systems, including ballast control and monitoring, drilling instrumentation, vessel management systems, marine advisory systems, machinery plant control and monitoring systems, and closed circuit television systems.
The Company's Mako subsidiary serves the growing offshore petroleum and marine industries with technical support services, and products vital to offshore petroleum production, through rentals of its remotely operated vehicles (ROV), topside and subsea equipment, and diving support systems used in diving operations, maintenance and repair operations, offshore construction, and environmental/marine surveys.
The Company's strategy is to consolidate service providers to the offshore industry, as well as designers and manufacturers of subsea, surface, and offshore rig equipment used by major, independent, and foreign national oil and gas companies in deep-water exploration and production of oil and gas throughout the world. Deep Down's customers include BP Petroleum, Royal Dutch Shell, Exxon Mobil Corporation, Devon Energy Corporation, Chevron Corporation, Anadarko Petroleum Corporation, Marathon Oil Corporation, Kerr-McGee Corporation, Nexen Inc., BHP, Amerada Hess, Helix, Oceaneering International, Inc., Subsea 7, Inc., Transocean Offshore, Diamond Offshore, Marinette Marine Corporation, Acergy, Veolia Environmental Services, Noble Energy Inc., Aker Kvaerner, Cameron, Oil States, Dril-Quip, Inc., Nexans, Cabett, JDR, and Duco, among others. For further company information, please visit http://www.deepdowninc.com,http://www.electrowaveusa.com and http://www.makotechnologies.com.
One of our most important responsibilities is to communicate with shareholders in an open and direct manner. Comments are based on current management expectations, and are considered 'forward-looking statements,' generally preceded by words such as 'plans,' 'expects,' 'believes,' 'anticipates,' or 'intends.' We cannot promise future returns. Our statements reflect our best judgment at the time they are issued, and we disclaim any obligation to update or alter forward-looking statements as the result of new information or future events. Deep Down urges investors to review the risks and uncertainties contained within its filings with the Securities and Exchange Commission.
Deep Down, Inc. Consolidated Statements of Operations For the Year Ended December 31, 2007 and For the Period Since Inception (June 29, 2006) to December 31, 2006
Historical Results Unaudited Pro forma Year Ended Year Ended December 31, 2007 December 31, 2006
Operating expenses: Selling, general & administrative (1) 4,284,553 5,710,324 Depreciation 426,964 166,468 Total operating expenses 4,711,517 5,876,792
Operating income 1,657,844 (2,211,042)
Other income (expense): Gain on disposal of assets - - Gain on debt extinguishment 2,000,000 - Interest income 94,487 - Interest expense (2) (2,430,149) (578,335)
Total other income (335,662) (578,335)
Income from continuing operations 1,322,182 (2,789,377)
Income tax expense (369,673) (22,250) Net income (loss) $952,509 $(2,811,627)
Basic earnings per share $0.01 $(0.04) Shares used in computing basic per share amounts 73,917,190 75,862,484
Diluted earnings per share $0.01 $(0.04) Shares used in computing diluted per share amounts 104,349,455 75,862,484
(1) Includes $3.3 million compensation expense from the issuance of Series F and G preferred shares. (2) Includes approximately $423,258 additional interest expense from the accretion of the Series E preferred shares.
Calculation of EBITDA
2007 Pro Forma 2006 Change %
Net income (loss) $952,509 $ (2,811,627) $3,764,136 395.20% Tax expense 369,673 22,250 347,423 94.00% Gain on debt extinguishment (2,000,000) - (2,000,000) 100.00% Interest 2,335,662 578,335 1,757,327 75.20% Other income (expense) - - - NMF Depreciation and amortization expense 426,964 166,468 260,496 61.00% Stock based compensation expense 187,394 3,340,792 (3,153,398) NMF
EBITDA $2,272,202 $1,296,218 $975,984 43.00%
Deep Down, Inc. Statements of Stockholders' Equity For the Year Ended December 31, 2007 and For the Period Since Inception (June 29, 2006) to December 31, 2006
December 31, December 31, 2007 2006 Assets Cash and equivalents $2,206,220 $ 12,462 Restricted cash 375,000 - Accounts receivable, net of allowance of $139,787 and $81,809 7,190,466 1,264,228 Prepaid expenses and other current assets 312,058 156,975 Inventory 502,253 - Lease receivable, short term 414,000 - Work in progress 945,612 916,485 Receivable from Prospect, net 2,687,333 - Total current assets 14,632,942 2,350,150 Property and equipment, net 5,172,804 845,200 Other assets, net of accumulated amortization of $54,560 and $0 1,109,152 - Lease receivable, long term 173,000 - Intangibles, net 4,369,647 - Goodwill 10,594,144 6,934,213 Total assets $36,051,689 $10,129,563
Liabilities and Stockholders' Equity (Deficit) Accounts payable and accrued liabilities $3,569,826 $816,490 Deferred revenue 188,030 190,000 Payable to Mako Shareholders 3,205,667 - Current portion of long-term debt 995,177 410,731 Total current liabilities 7,958,700 1,417,221 Long-term debt, net of accumulated discount of $1,703,258 and $0 10,698,818 757,617 Series E redeemable exchangeable preferred stock, face value and liquidation preference of $1,000 per share, no dividend preference, authorized 10,000,000 aggregate shares of all series of Preferred stock 500 and 5,000 issued and outstanding, respectively 386,411 3,486,376 Series G redeemable exchangeable preferred stock, face value and liquidation preference of $1,000 per share, no dividend preference, authorized 10,000,000 aggregate shares of all series of Preferred stock 0 and 1,000 issued and outstanding, respectively - 697,275 Total liabilities 19,043,929 6,358,489
Temporary equity: Series D redeemable convertible preferred stock, $0.01 par value, face value and liquidation preference of $1,000 per share, no dividend preference, authorized 10,000,000 aggregate shares of all series of Preferred stock 5,000 issued and outstanding 4,419,244 4,419,244 Series F redeemable convertible preferred stock, $0.01 par value, face value and liquidation preference of $1,000 per share, no dividend preference, authorized 10,000,000 aggregate of all series of Preferred stock 0 and 3,000 issued and outstanding, respectively - 2,651,547 Total temporary equity 4,419,244 7,070,791 Stockholders' equity (deficit): Series C convertible preferred stock, $0.001 par value, 7% cumulative dividend, authorized 10,000,000 aggregate shares of all series of Preferred stock 0 and 22,000 shares issued and outstanding, respectively - 22 Common stock, $0.001 par value, 490,000,000 shares authorized, 85,976,526 and 82,870,171 shares issued and outstanding, respectively 85,977 82,870
Paid in capital 14,849,847 82,792
Accumulated deficit 2,347,308 3,299,817
Total stockholders' equity (deficit) 12,588,516 3,299,717
Total liabilities and stockholders' equity $36,051,689 $10,129,563
Deep Down to Acquire Flotation Technologies HOUSTON, April 17 /PRNewswire-FirstCall/ -- Deep Down, Inc. (OTC Bulletin Board: DPDW) today announced it has executed a Stock Purchase Agreement to purchase all of the outstanding capital stock of Flotation Technologies, Inc.
Headquartered in Biddeford, Maine, Flotation Technologies is a recognized leader in the design and manufacture of deepwater buoyancy systems, specializing in Flotec(TM) syntactic foam and polyurethane elastomer products. With extensive engineering, design, fabrication, and analysis capabilities, Flotation Technologies provides quick turnaround, cost-effective buoyancy and elastomer products to the worldwide oceanographic, offshore energy, seismic, and military markets. Within the past few years, Flotation Technologies has received its approved vendor status for the supply of engineered products such as distributed buoyancy, installation buoyancy and bend limiting products from numerous customers including Aker Kvaerner, Cooper Cameron, Chevron, Devon Energy, Exxon Mobil, Oceaneering Multiflex, Petrobras, Shell, Statoil, Technip, and Wellstream International. More information can be obtained at http://www.flotec.com.
Unaudited financial information provided by the management of Flotation Technologies indicates that revenue for the latest twelve months ending March 31, 2008, was approximately $17.27 million, with pretax income of $4.84 million, and EBITDA of $5.26 million, adjusted for certain nonrecurring expenses and a gain on sale of real estate assets. Financial results of operations for the years ended December 31, 2007 and 2006, will be presented when audits are finalized.
'The total purchase price for the acquisition is expected to be approximately $23.3 million. Flotation Technologies' revenue for the year ended December 31, 2007, was approximately double the revenue realized in the prior year. According to Quest Subsea Forecast (October 2007), capital expenditures in the offshore energy industry are expected to experience significant growth for the next several years. Our strategy is to participate in that growth. Buoyancy will become more important as the offshore energy industry continues its trend toward exploration and development activities in ultra deep waters. This acquisition will give Deep Down a major product line, position the Company to become a leader in flotation systems, and increase our presence in deepwater operations,' commented Robert E. Chamberlain, Jr., Deep Down's chairman and chief acquisition officer.
Ronald E. Smith, Deep Down's president and chief executive officer commented, 'We are very excited about this acquisition. Our strategy is to work closely with management to expand their existing business and explore new areas of opportunity. Our view of the future of subsea equipment involves structural integration of buoyancy into various components of the undersea distribution system. Due to our prominence in installation activities of subsea equipment throughout the world, our customers are increasingly asking us to supply the equipment and systems we install. Where appropriate, we intend to manufacture high-demand technology-advantaged products in high-growth markets. Our strategy is to become a major player in many facets of the offshore deepwater industry.'
Deep Down's closing of the purchase of Flotation Technologies remains subject to several conditions, including Deep Down's obtaining financing for the payment of the purchase price.
About Deep Down, Inc.
Deep Down specializes in the provision of innovative solutions, installation management, engineering services, support services, custom fabrication and storage management services for the offshore subsea control, umbilical, and pipeline industries. The company fabricates component parts of subsea distribution systems and assemblies that specialize in the development of subsea fields and tie backs. These items include umbilicals, flow lines, distribution systems, pipeline terminations, controls, winches, and launch and retrieval systems, among others. Deep Down provides these services from the initial field conception phase, through manufacturing, site integration testing, installation, topside connections, and the final commissioning of a project.
The Company's ElectroWave subsidiary offers products and services in the fields of electronic monitoring and control systems for the energy, military, and commercial business sectors. ElectroWave designs, manufactures, installs, and commissions integrated PLC and SCADA based instrumentation and control systems, including ballast control and monitoring, drilling instrumentation, vessel management systems, marine advisory systems, machinery plant control and monitoring systems, and closed circuit television systems.
The Company's Mako subsidiary serves the growing offshore petroleum and marine industries with technical support services, and products vital to offshore petroleum production, through rentals of its remotely operated vehicles (ROV), topside and subsea equipment, and diving support systems used in diving operations, maintenance and repair operations, offshore construction, and environmental/marine surveys.
The Company's strategy is to consolidate service providers to the offshore industry, as well as designers and manufacturers of subsea, surface, and offshore rig equipment used by major, independent, and foreign national oil and gas companies in deep-water exploration and production of oil and gas throughout the world. Deep Down's customers include BP Petroleum, Royal Dutch Shell, Exxon Mobil Corporation, Devon Energy Corporation, Chevron Corporation, Anadarko Petroleum Corporation, Marathon Oil Corporation, Kerr-McGee Corporation, Nexen Inc., BHP, Amerada Hess, Helix, Oceaneering International, Inc., Subsea 7, Inc., Transocean Offshore, Diamond Offshore, Marinette Marine Corporation, Acergy, Veolia Environmental Services, Noble Energy Inc., Aker Kvaerner, Cameron, Oil States, Dril-Quip, Inc., Nexans, Cabett, JDR, and Duco, among others. For further company information, please visit http://www.deepdowninc.com,http://www.electrowaveusa.com and http://www.makotechnologies.com.
One of our most important responsibilities is to communicate with shareholders in an open and direct manner. Comments are based on current management expectations, and are considered 'forward-looking statements,' generally preceded by words such as 'plans,' 'expects,' 'believes,' 'anticipates,' or 'intends.' We cannot promise future returns. Our statements reflect our best judgment at the time they are issued, and we disclaim any obligation to update or alter forward-looking statements as the result of new information or future events. Deep Down urges investors to review the risks and uncertainties contained within its filings with the Securities and Exchange Commission.
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NEWS NEWS NEWS! Cash raised, Flotek Deal COMPLETED. NO MORE DEBT! WOW
Deep Down Sells $40 Million of Common StockJune 5, 2008 11:19 AM ET advertisement
Down Inc (DPDW)
Texas, June 5 /-- Deep Down, Inc. (OTC Bulletin Board: DPDW) announced today that it has closed a $40 million private placement of common stock to institutional and accredited investors. Deep Down sold 57,142,857 shares of its Common Stock at a price of $0.70 per share. As part of this transaction, Deep Down will file a registration statement covering the resale of the shares of Common Stock acquired in this offering. Dahlman Rose & Company, LLC acted as exclusive placement agent for the financing.
Deep Down used $22.0 million of the net proceeds to complete the previously announced acquisition of Flotation Technologies, which closed today. Flotation recently introduced its patent pending CoreTec (TM) drilling riser buoyancy modules, which Deep Down believes can become the industry standard for ultra deepwater applications. Deep Down will use approximately $12.5 million of the net proceeds to repay a $12 million mezzanine facility that was provided by Prospect Capital Corporation. This mezzanine facility has a 15.5% annual interest rate. The Company will use the remaining net proceeds for working capital and general corporate purposes.
"We are extremely pleased by the vote of confidence conveyed by the professional investors who are participating in this private placement. The ability to raise $40 million with these sophisticated investors validates the business plan and strategy we have developed," commented Ronald E. Smith, Deep Down's President and CEO. "Repayment of the mezzanine facility will give us an essentially debt-free balance sheet and save us over $2.0 million per year in interest and other related costs," added Eugene L. Butler, Deep Down's CFO. "As evidenced by the recent $9 million letter of intent from Delba International to supply and install the deepwater marine drilling riser flotation system for the new-build Delba III semisubmersible drilling rig, we are already experiencing significantly positive developments from our planned ownership of Flotation Technologies," concluded Robert E. Chamberlain, Jr., Deep Down's Chairman.
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Deep Down Receives Second $9.0 Million Order for BuoyancyJune 5, 2008 2:20 PM ET advertisement
All PR Newswire newsHOUSTON, June 5 /PRNewswire-FirstCall/ -- Deep Down, Inc. (OTC Bulletin Board: DPDW) today announced that it has received a second letter of intent for approximately $9 million from Delba International to supply and install the deepwater marine drilling riser flotation system for the new-build Delba IV semisubmersible drilling rig. The letter of intent is subject to the negotiation of a final purchase order once engineering is completed. The Letters of Intent authorize expenditures for such engineering efforts. Together with the previously announced Letter of Intent for the Delba III, Deep Down now has orders for approximately $18 million of deepwater marine drilling riser flotation systems. Both the Delba III and the Delba IV are rated to drill in 2,400 meters of water but are readily upgradeable to 2,700 meters and have long term contracts to drill in Brazilian waters.
"A Letter of Intent is the first step in a committed process which typically becomes a purchase contract upon completion of joint engineering efforts between us and our clients," commented Ronald E. Smith, Deep Down's president and CEO.
About Deep Down, Inc.
Deep Down specializes in the provision of innovative solutions, installation management, engineering services, support services, custom fabrication and storage management services for the offshore subsea control, umbilical, and pipeline industries. The company fabricates component parts of subsea distribution systems and assemblies that specialize in the development of subsea fields and tie backs. These items include umbilicals, flow lines, distribution systems, pipeline terminations, controls, winches, and launch and retrieval systems, among others. Deep Down provides these services from the initial field conception phase, through manufacturing, site integration testing, installation, topside connections, and the final commissioning of a project.
The Company's Flotation Technologies subsidiary is a recognized leader in the design and manufacture of deepwater buoyancy systems, specializing in Flotec(TM) syntactic foam and polyurethane elastomer products. With extensive engineering, design, fabrication, and analysis capabilities, Flotation Technologies provides quick turnaround, cost-effective buoyancy and elastomer products to the worldwide oceanographic, offshore energy, seismic, and military markets.
The Company's Mako subsidiary serves the growing offshore petroleum and marine industries with technical support services, and products vital to offshore petroleum production, through rentals of its remotely operated vehicles (ROV), topside and subsea equipment, and diving support systems used in diving operations, maintenance and repair operations, offshore construction, and environmental/marine surveys.
The Company's ElectroWave subsidiary offers products and services in the fields of electronic monitoring and control systems for the energy, military, and commercial business sectors. ElectroWave designs, manufactures, installs, and commissions integrated PLC and SCADA based instrumentation and control systems, including ballast control and monitoring, drilling instrumentation, vessel management systems, marine advisory systems, machinery plant control and monitoring systems, and closed circuit television systems.
The Company's strategy is to become a leading provider of products and services to the offshore industry, including shallow, deep and ultra-deep water applications in oil and gas exploration, development and production activities and maritime operations. Management plans to achieve this strategy through organic growth and strategic acquisitions of complementary businesses with technological advantages in deepwater environments. Deep Down's customers include Acergy, Aker Kvaerner, Amerada Hess, Anadarko Petroleum Corporation, BHP, BP Petroleum, Cabett, Cooper Cameron, Chevron Corporation, Delba International, Dril-Quip, Inc., Devon Energy Corporation, Diamond Offshore, Duco, Exxon Mobil Corporation, Helix, JDR, Kerr-McGee Corporation, Marinette Marine Corporation, Marathon Oil Corporation, Nexans, Inc., Noble Energy Inc., Oceaneering International, Inc., Oil States, Petrobras, Royal Dutch Shell, Statoil, Subsea 7, Inc., Technip, Transocean Offshore, Veolia Environmental Services and Wellstream International, among others. For further company information, please visit http://www.deepdowninc.com, and http://www.flotec.com,http://www.makotechnologies.com and http://www.electrowaveusa.com.Posts: 2498 | Registered: Mar 2006
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Was in this one a month ago or so and got out before the slide...back in now at .85...This company does look good stockstar...lets see where she goes!
Posts: 51 | From: Upstate ny | Registered: Jun 2008
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Although I am new to trading, I have been watching DPDW since Jan 07' when it was around .20-.25 but I did not have the capital to invest in it. I'm just curious why this stock has dropping recently? Is that just because of the lack of news or what? and in your opinion is this a decent entry point or do I wait until I see some stability because at .68 I think is a steal for DPDW honestly.
Posts: 301 | From: Hamilton, NJ | Registered: Jul 2007
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Deep Down Announces 96% Increase in Revenues
HOUSTON, Aug. 20 /PRNewswire-FirstCall/ -- Deep Down, Inc. (OTC:DPDW) (BULLETIN BOARD: DPDW) announced unaudited results on August 15, 2008, for the three months and six months ended June 30, 2008, on Form 10-Q filed with the U.S. Securities and Exchange Commission.
Deep Down generated revenue of $14.2 million for the six months ended June 30, 2008 compared to $7.2 million for the same period last year, an increase of $7.0 million, or 96%. Our acquisitions accounted for $5.1 million of this increase. Mako was included for the entire period and accounted for $2.7 million of the increase. Flotation Technologies was included for two months and accounted for $1.5 million of the increase. ElectroWave was included for six months and accounted for $0.9 million of the increase, but the six month period in 2007 included only three months revenue for ElectroWave since it was acquired in April 2007. Our existing businesses continued to strengthen with increased revenues of $1.9 million, or 29%, over last year's six month period. Contract revenues were up 25%, and rentals were up 47%. Our offshore market continues to be strong as we continue to expand our customer base.
Deep Down generated revenues of $7.9 million for the three months ended June 30, 2008 compared to $5.1 million for the same period last year, an increase of $2.8 million, or 54%. Our acquisitions represented $3.0 million of the increase in revenue in addition to a slight revenue decrease in the core business of $0.2 million. This slight decrease in revenue was a result of certain customers delaying scheduled projects.
Gross margin for the six months ended June 30, 2008 was $4.8 million compared to $2.7 million in the same prior year period, an increase of $2.1 million, or 79%. $1.4 million of the increase is attributable to the inclusion of the acquisitions in this period. The overall gross margin was 34 % for the first six months of 2008 as compared to 37% for the same period last year. The gross margin is slightly lower due to an increase in personnel.
SG&A for the six months ended June 30, 2008, was $5.4 million compared to $1.8 million for the same period last year, an increase of $3.6 million, or 209%. The acquisitions of Mako and Flotation represented $1.5 million of the increase. Bad debt expense increased by $0.8 million due to the write-off of two accounts, one of which filed for bankruptcy protection during the quarter ($0.2 million of the total bad debt is included in the Mako subsidiary). Personnel and related costs increased by $1.0 million primarily due to an expansion of our businesses, combined with the related costs of administering a public company and complying with reporting requirements. Additionally, we paid approximately $0.7 million in professional, accounting, and legal fees to support our various initiatives during the six months ended June 30, 2008, including the filing of a registration statement, acquisitions and reporting requirements. Stock based compensation related to employee stock options and restricted stock was approximately $0.3 million in the current fiscal year compared to approximately $40,000 for the comparable prior year period.
Operating loss for the six months ended June 30, 2008, was $1.5 million compared to operating income of $0.8 million for the same prior year period. Net loss for the six months ended June 30, 2008, was $5.0 million compared to net income of $0.8 million for the same prior period. Income was impacted by one-time interest expense and loss on debt extinguishment expenses totaling $2.6 million related to the early payoff of our secured credit agreement (the "Credit Agreement"). Earnings before interest, taxes, depreciation, amortization and other non-cash charges ("EBITDA") for the six months ended June 30, 2008, was $0.5 million, compared to $1.0 million, a decrease of $0.5 million over the same prior year period.
Interest expense for the six months ended June 30, 2008, was $3.5 million compared to $1.5 million for the same prior year period. In connection with the early payoff of the Credit Agreement, Deep Down accelerated the remaining deferred financing costs totaling $0.7 million and recorded this charge to interest expense. Additionally, $1.5 million in debt discounts were accelerated and recorded to interest expense, along with early termination fees of approximately $0.5 million. Deep Down paid cash interest related to the Credit Agreement totaling $0.8 million for the six months ended June 30, 2008. For the comparable period last year, $1.4 million of the total interest was related to accretion on the redemption of Series G and Series E Preferred Stock.
"I am pleased to report this quarter that Deep Down continues to improve its financial position. The Company is now essentially debt free and has retired all of its remaining preferred shares. Liquidity is strong with unrestricted cash and equivalents of $4.1 million and a current ratio of 3.8. Our working capital position is $10.8 million. Stockholders' equity has improved dramatically and is now $52.9 million compared to $12.6 million on December 31, 2007. We remain excited and optimistic about the prospects for continued revenue growth and a return to profitability," commented Robert E. Chamberlain, Jr., Deep Down's Chairman.
About Deep Down, Inc.
Deep Down specializes in the provision of innovative solutions, installation management, engineering services, support services, custom fabrication and storage management services for the offshore subsea control, umbilical, and pipeline industries. The company fabricates component parts of subsea distribution systems and assemblies that specialize in the development of subsea fields and tie backs. These items include umbilicals, flow lines, distribution systems, pipeline terminations, controls, winches, and launch and retrieval systems, among others. Deep Down provides these services from the initial field conception phase, through manufacturing, site integration testing, installation, topside connections, and the final commissioning of a project.
The Company's ElectroWave subsidiary offers products and services in the fields of electronic monitoring and control systems for the energy, military, and commercial business sectors. ElectroWave designs, manufactures, installs, and commissions integrated PLC and SCADA based instrumentation and control systems, including ballast control and monitoring, drilling instrumentation, vessel management systems, marine advisory systems, machinery plant control and monitoring systems, and closed circuit television systems.
The Company's Mako subsidiary serves the growing offshore petroleum and marine industries with technical support services, and products vital to offshore petroleum production, through rentals of its remotely operated vehicles (ROV), topside and subsea equipment, and diving support systems used in diving operations, maintenance and repair operations, offshore construction, and environmental/marine surveys.
Flotation engineers, designs and manufactures deepwater buoyancy systems using high-strength Flotec(TM) syntactic foam and polyurethane elastomers. Flotation's product offerings include distributed buoyancy for flexible pipes and umbilicals, drilling riser buoyance modules, CoreTec(TM) drilling riser buoyancy modules, ROVits(TM) buoyancy, Hydro-Float mooring buoys, Stablemoor(TM) low-drag ADCP deployment solution, Quick-Loc(TM) cable floats, Hardball(TM) umbilical floats, Flotec(TM) cable and pipeline protection, Inflex(TM) polymer bend restrictors, and installation buoyancy of any size and depth rating.
The Company's strategy is to become a leading provider of products and services to the offshore industry, including shallow, deep, and ultra-deep water applications in oil and gas exploration, development and production activities, and maritime operations. Management plans to achieve this strategy through organic growth and strategic acquisitions of complementary businesses with technological advantages in deepwater environments. For further company information, please visit http://www.deepdowninc.com/,http://www.electrowaveusa.com/,http://www.makotechnologies.com/ and http://www.flotec.com/.
One of our most important responsibilities is to communicate with shareholders in an open and direct manner. Comments are based on current management expectations, and are considered "forward-looking statements," generally preceded by words such as "plans," "expects," "believes," "anticipates," or "intends." We cannot promise future returns. Our statements reflect our best judgment at the time they are issued, and we disclaim any obligation to update or alter forward-looking statements as the result of new information or future events. Deep Down urges investors to review the risks and uncertainties contained within its filings with the Securities and Exchange Commission.
DEEP DOWN, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
June 30, December 31, 2008 2007 ASSETS Cash and equivalents $4,085,543 $2,206,220 Restricted cash - 375,000 Accounts receivable, net of allowance of $818,992 and $139,787 respectively 8,614,961 7,190,466 Prepaid expenses and other current assets 710,213 312,058 Inventory 179,343 502,253 Lease receivable, short-term 414,000 414,000 Work in progress 681,790 945,612 Receivable from Prospect, net - 2,687,333 Total current assets 14,685,850 14,632,942 Property and equipment, net 10,651,053 5,172,804 Other assets, net of accumulated amortization of $0 and $54,560 respectively 550,819 1,109,152 Lease receivable, long-term 500 173,000 Intangibles, net 18,745,713 4,369,647 Goodwill 13,001,556 10,594,144 Total assets $57,635,491 $36,051,689
LIABILITIES AND STOCKHOLDER'S EQUITY Accounts payable and accrued liabilities $3,070,105 $3,569,826 Deferred revenue 725,521 188,030 Payable to Mako shareholders - 3,205,667 Current portion of long-term debt 47,477 995,177 Total current liabilities 3,843,103 7,958,700 Long-term debt, net of accumulated discount of $0 and $1,703,258 respectively 919,381 10,698,818 Series E redeemable exchangeable preferred stock, par value $0.01, face value and liquidation preference of $1,000 per share, no dividend preference, authorized 10,000,000 aggregate shares of all series of preferred stock, - 0 - and 500 issued and outstanding, respectively - 386,411 Total liabilities 4,762,484 19,043,929 Temporary equity: Series D redeemable convertible preferred stock, $0.01 par value, face value and liquidation preference of $1,000 per share, no dividend preference, authorized 10,000,000 aggregate shares of all series of preferred stock, - 0 - and 5,000 issued and outstanding, respectively - 4,419,244 Total temporary equity - 4,419,244 Stockholders' equity: Common stock, $0.001 par value, 490,000,000 shares authorized, 174,732,501 and 85,976,526 shares issued and outstanding, respectively 174,733 85,977 Paid-in capital 60,000,402 14,849,847 Accumulated deficit (7,302,128) (2,347,308) Total stockholders' equity 52,873,007 12,588,516 Total liabilities and stockholders' equity $57,635,491 $36,051,689
posted
Flotation Technologies Named The 27th Fastest Growing Manufacturing Company In The U.S. Monday 09/15/2008 11:03 AM ET - Businesswire
Related Companies Symbol Last %Chg DPDW 0.57 -8.06%
As of 2:30 PM ET 9/15/08 Flotation Technologies, Inc., a Deep Down Inc. company (OTCBB: DPDW) and a world leader in the engineering, design and manufacturing of deepwater buoyancy and polyurethane elastomer products, today announced the company has been named the 27th fastest growing, privately owned manufacturing company in the United States by Inc. magazine. Overall, Flotation Technologies ranked No. 1,006 on the prestigious Inc. 5000 list. These rankings recognize the substantial growth the company has experienced over the past three years, including the doubling of its revenue from 2006 to 2007.
"Being recognized by Inc. magazine for our growth is an honor shared by the management and employees of Flotation Technologies and speaks to our drive and the dedication to the customers and markets we serve," stated David Capotosto, president, Flotation Technologies. "This abiding commitment, fully supported by our new parent company, Deep Down, has and will continue to fuel Flotation Technologies' aggressive growth."
"The growth Flotation Technologies has experienced since 2004 is unparalleled," stated Robert Chamberlain, Jr., chairman and director, Deep Down, Inc. "It is this growth coupled with Flotation Technologies' expertise in the engineering, design and manufacture of subsea products that drew Deep Down to acquire the company in June of 2008. We are extremely proud of Flotation Technologies for receiving this prominent recognition and look forward to the tremendous future of the company."
The Inc. list is a comprehensive look at the most important segment of the economy--America's independent-minded entrepreneurs. Taken as a whole, these companies represent the backbone of the U.S. economy. The 5,000 companies that made the list reported aggregate revenue of $185 billion and median three-year growth of 147 percent. More important, the 2008 Inc. 5000 companies were engines of job growth, having created more than 826,033 jobs since these companies were founded. The 2008 Inc. 5000 list measures revenue growth from 2004 through 2007. Flotation Technologies' revenue in 2004 was $2,873,686 and $13,410,002 in 2007. To qualify, companies must be U.S.-based and privately held, independent--not subsidiaries or divisions of other companies--as of December 31, 2007, and have had at least $200,000 in revenue in 2004, and $2 million in 2007.
About Inc.com
Inc.com, the daily resource for entrepreneurs, delivers how-to guides, advice, tools, breaking news, and rich multi-media to help business owners and CEOs start, run, and grow their businesses. Inc.com offers dynamic marketing solutions to help advertisers effectively reach Inc.com's audience of business leaders. Visit inc.com.
Each year, Inc. magazine and Inc.com celebrate the remarkable achievements of today's entrepreneurial superstars -- the privately held small businesses that drive our economy. The Inc. 500|Inc. 5000 Conference brings together members of the Inc. 5000 community--both a new class of Inc. 5000 honorees and the list's alumni--for three days of powerful networking, inspired learning, and momentous celebration. For the first time ever, this powerful networking event is open to all. Please join us September 18-20, 2008 at the Gaylord National Resort and Convention Center in Washington, D.C. For more information or to register, visit Inc5000Conference.com or call 877-211-0489.
About Flotation Technologies, Inc.
Flotation Technologies, Inc., based in Biddeford, Maine, and a wholly-owned subsidiary of Deep Down Inc., (OTCBB: DPDW), is a world leader in the engineering, design and manufacturing of deepwater buoyancy systems using high-strength Flotec(TM) syntactic foams and polyurethane elastomers. Focused on the offshore oil, oceanographic, seismic and government markets, Flotation Technologies delivers world-class buoyancy products for a host of marine applications such as: distributed buoyancy for flexible pipes and umbilicals, drilling riser buoyancy modules, ROV buoyancy, QuickLoc(TM) cable floats, Hardball(TM) umbilical floats, FLOTECT(TM) cable and pipeline protection, Inflex(TM) polymer bend restrictors and installation buoyancy of any size and depth rating. For more information, visit flotec.com.
About Deep Down, Inc.
Deep Down specializes in the provision of innovative solutions, installation management, engineering services, support services, custom fabrication and storage management services for the offshore subsea control, umbilical, and pipeline industries. The company fabricates component parts of subsea distribution systems and assemblies that specialize in the development of subsea fields and tie backs. These items include umbilicals, flow lines, distribution systems, pipeline terminations, controls, winches, and launch and retrieval systems, among others. Deep Down provides these services from the initial field conception phase, through manufacturing, site integration testing, installation, topside connections, and the final commissioning of a project.
The Company's ElectroWave subsidiary offers products and services in the fields of electronic monitoring and control systems for the energy, military, and commercial business sectors. ElectroWave designs, manufactures, installs, and commissions integrated PLC and SCADA based instrumentation and control systems, including ballast control and monitoring, drilling instrumentation, vessel management systems, marine advisory systems, machinery plant control and monitoring systems, and closed circuit television systems.
The Company's Mako subsidiary serves the growing offshore petroleum and marine industries with technical support services, and products vital to offshore petroleum production, through rentals of its remotely operated vehicles (ROV), topside and subsea equipment, and diving support systems used in diving operations, maintenance and repair operations, offshore construction, and environmental/marine surveys. For more information, visit deepdowninc.com, electrowaveusa.com and makotechnologies.com.
Forward Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding our strategy, future operations, future financial position, future revenues, acquisitions, projected costs, prospects, plans and objectives of management are forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. All of the information provided in this release is as of September 15, 2008 and Flotation Technologies, Inc. undertakes no duty to update the information provided herein.
SOURCE: Flotation Technologies, Inc.
McClain Marketing Group Kristen Jensen Phone: 207-761-8372 ext: 209 E-Mail: kjensen*mcclainmarketing.com
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Although I am new to trading, I have been watching DPDW since Jan 07' when it was around .20-.25 but I did not have the capital to invest in it. I'm just curious why this stock has dropping recently? Is that just because of the lack of news or what? and in your opinion is this a decent entry point or do I wait until I see some stability because at .68 I think is a steal for DPDW honestly.
