Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 25, 2014 | Jun. 30, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'Deep Down, Inc. | ' | ' |
Entity Central Index Key | '0001110607 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 15,198,008 | ' |
Entity Public Float | ' | ' | $14,087,119 |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Cash and cash equivalents | $5,260 | $1,523 |
Accounts receivable, net of allowance of $1,006 and $1,211, respectively | 4,979 | 7,140 |
Inventory | 254 | 232 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 5,847 | 2,547 |
Prepaid expenses and other current assets | 274 | 321 |
Total current assets | 16,614 | 11,763 |
Property, plant and equipment, net | 15,395 | 13,103 |
Investment in joint venture | 468 | 984 |
Intangibles, net | 119 | 126 |
Goodwill | 4,916 | 4,916 |
Other assets | 790 | 607 |
Total assets | 38,302 | 31,499 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ' | ' |
Accounts payable and accrued liabilities | 2,788 | 4,289 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 201 | 753 |
Deferred revenues | 0 | 44 |
Current portion of long-term debt | 1,716 | 680 |
Total current liabilities | 4,705 | 5,766 |
Long-term debt, net | 3,218 | 2,936 |
Total liabilities | 7,923 | 8,702 |
Stockholders' equity: | ' | ' |
Preferred stock, $0.001 par value, 10,000 shares authorized, 0 shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value, 24,500 shares authorized, 15,261 and 10,152 shares issued and outstanding, respectively | 15 | 10 |
Additional paid-in capital | 72,142 | 63,970 |
Accumulated deficit | -41,778 | -41,183 |
Total stockholders' equity | 30,379 | 22,797 |
Total liabilities and stockholders' equity | $38,302 | $31,499 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
ASSETS | ' | ' |
Accounts receivable allowance | $1,006 | $1,211 |
Stockholders' equity: | ' | ' |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Common stock par value | $0.00 | $0.00 |
Common stock shares authorized | 24,500,000 | 24,500,000 |
Common stock issued | 15,261,000 | 10,152,000 |
Common stock outstanding | 15,261,000 | 10,152,000 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Income Statement [Abstract] | ' | ' |
Revenues | $29,593 | $29,034 |
Cost of sales: | ' | ' |
Cost of sales | 19,454 | 18,424 |
Depreciation expense | 1,425 | 1,317 |
Total cost of sales | 20,879 | 19,741 |
Gross profit | 8,714 | 9,293 |
Operating expenses: | ' | ' |
Selling, general and administrative | 8,769 | 8,947 |
Depreciation and amortization | 158 | 456 |
Impairment of long-lived assets | 0 | 2,156 |
Total operating expenses | 8,927 | 11,559 |
Operating loss | -213 | -2,266 |
Other income (expense): | ' | ' |
Interest expense, net | -195 | -155 |
Equity in net loss of joint venture | -16 | -179 |
Other, net | -189 | 198 |
Total other income (expense) | -400 | -136 |
Loss before income taxes | -613 | -2,402 |
Income tax benefit (expense) | 18 | -52 |
Net loss | ($595) | ($2,454) |
Net loss per share: | ' | ' |
Basic | ($0.05) | ($0.24) |
Diluted | ($0.05) | ($0.24) |
Weighted-average shares outstanding: | ' | ' |
Basic | 11,858 | 10,185 |
Diluted | 11,860 | 10,185 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
In Thousands, except Share data | ||||
Beginning Balance, Amount at Dec. 31, 2011 | $10 | $63,504 | ($38,729) | $24,785 |
Beginning Balance, Shares at Dec. 31, 2011 | 10,244 | ' | ' | ' |
Net loss | ' | ' | -2,454 | -2,454 |
Shares purchased and retired, Shares | -40 | ' | ' | ' |
Shares purchased and retired, Amount | ' | -48 | ' | -48 |
Shares issued due to reverse split rounding, Shares | 2 | ' | ' | ' |
Unvested restricted stock award shares forfeited and retired, Shares | -16 | ' | ' | ' |
Shares surrendered to settle employee tax liabilities and retired, Shares | -38 | ' | ' | ' |
Shares surrendered to settle employee tax liabilities and retired, Amount | ' | -40 | ' | -40 |
Share-based compensation | ' | 554 | ' | 554 |
Ending Balance, Amount at Dec. 31, 2012 | 10 | 63,970 | -41,183 | 22,797 |
Ending Balance, Shares at Dec. 31, 2012 | 10,152 | ' | ' | ' |
Net loss | ' | ' | -595 | -595 |
Unvested restricted stock award shares forfeited and retired, Shares | -33 | ' | ' | ' |
Shares surrendered to settle employee tax liabilities and retired, Shares | -32 | ' | ' | ' |
Shares surrendered to settle employee tax liabilities and retired, Amount | ' | -61 | ' | -61 |
Share-based compensation | ' | ' | ' | 610 |
Restricted stock awards, Shares | 730 | ' | ' | ' |
Restricted stock awards, Amount | 1 | -1 | ' | ' |
Issuance of common stock, net, Shares | 4,444 | ' | ' | ' |
Issuance of common stock, net, Amount | 4 | 7,624 | ' | 7,628 |
Ending Balance, Amount at Dec. 31, 2013 | $15 | $72,142 | ($41,778) | $30,379 |
Ending Balance, Shares at Dec. 31, 2013 | 15,261 | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities: | ' | ' |
Net loss | ($595) | ($2,454) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Impairment of long-lived assets | 0 | 2,156 |
Depreciation and amortization | 1,583 | 1,773 |
Share-based compensation | 610 | 554 |
Bad debt expense | 61 | 1,134 |
Equity in net loss of joint venture | 16 | 179 |
Abandonment of patents | 0 | 80 |
Forgiveness of debt | 0 | -10 |
Gain on disposal of property, plant and equipment | -30 | -198 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable | 2,039 | -2,460 |
Inventory | -22 | 0 |
Costs and estimated earnings in excess of billings on uncompleted contracts | -3,300 | -2,463 |
Prepaid expenses and other current assets | 47 | -59 |
Other assets | 250 | 34 |
Accounts payable and accrued liabilities | -1,501 | 1,723 |
Deferred revenues | -44 | -216 |
Billings in excess of costs and estimated earnings on uncompleted contracts | -552 | -1,014 |
Net cash used in operating activities | -1,438 | -1,241 |
Cash flows from investing activities: | ' | ' |
Proceeds from sale of property, plant and equipment | 120 | 263 |
Payments received on notes receivable | 13 | 55 |
Cash paid for patents | 0 | -35 |
Cash paid for exclusive product rights | 0 | -125 |
Cash paid for deposits, net | -413 | -166 |
Purchases of property, plant and equipment | -776 | -1,519 |
Cash distribution received from joint venture | 500 | 0 |
Net cash (used in) provided by investing activities | -556 | -1,527 |
Cash flows from financing activities: | ' | ' |
Proceeds from long-term debt | 1,021 | 1,170 |
Deferred financing costs on bank term loan | -45 | 0 |
Proceeds from issuance of common stock, net | 7,628 | 0 |
Cash paid for purchase of our common stock | 0 | -48 |
Principal payments on long-term debt | -2,873 | -1,810 |
Net cash provided by financing activities | 5,731 | -688 |
(Decrease) increase in cash and cash equivalents | 3,737 | -3,456 |
Cash and cash equivalents, beginning of year | 1,523 | 4,979 |
Cash and cash equivalents, end of year | 5,260 | 1,523 |
Supplemental schedule of operating, investing and financing activities: | ' | ' |
Cash paid for interest | 170 | 139 |
Prepaid insurance purchased on credit | 0 | 385 |
Property, plant and equipment acquired via debt | 3,170 | 1,200 |
Shares of common stock surrendered to settle employee payroll tax liabilities | $61 | $40 |
1_DESCRIPTION_OF_BUSINESS_AND_
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
Description of Business | |
Deep Down, Inc., a Nevada corporation (“Deep Down Nevada”), and its wholly-owned subsidiaries, Deep Down, Inc., a Delaware corporation (“Deep Down Delaware”); Mako Technologies, LLC, a Nevada limited-liability company (“Mako”) (operations consolidated into Deep Down Delaware in August 2012); Flotation Technologies, Inc., a Maine corporation (dissolved in August 2012), Deep Down International Holdings, LLC, a Nevada limited-liability company, and Deep Down Brasil, Ltda., a Brazil limited liability company (“Deep Down Brasil”), (collectively referred to as “Deep Down”, “we”, “us” or the “Company”) is an oilfield services company specializing in complex deepwater and ultra-deepwater oil production distribution system support services, serving the worldwide offshore exploration and production industry. Our services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, flotation and Remote Operated Vehicles (“ROVs”) and related services. We support subsea engineering, installation, commissioning, and maintenance projects through specialized, highly experienced service teams and engineered technological solutions. Deep Down’s primary focus is on more complex deepwater and ultra-deepwater oil production distribution system support services and technologies, used between the platform and the wellhead. | |
Additionally in August 2012, we consolidated the operations of Mako in Morgan City, Louisiana into Deep Down Delaware in Channelview, Texas. | |
Liquidity | |
As a deepwater service provider, our revenues, profitability, cash flows, and future rate of growth are substantially dependent on the condition of the global oil and gas industry generally, and our customers’ ability to invest capital for offshore exploration, drilling and production and maintain or increase levels of expenditures for maintenance of offshore drilling and production facilities. Oil and gas prices and the level of offshore drilling and production activity have historically been characterized by significant volatility. We enter into large, fixed-price contracts which may require significant lead time and investment. A decline in offshore drilling and production activity could result in lower contract volume or delays in significant contracts which could negatively impact our earnings and cash flows. Our earnings and cash flows could also be negatively affected by delays in payments by significant customers or delays in completion of our contracts for any reason. While our objective is to enter into contracts with our customers that are cash flow positive, we may not always be able to achieve this objective. We are dependent on our cash flows from operations to fund our working capital requirements and the uncertainties noted above create risks that we may not achieve our planned earnings or cash flow from operations, which may require us to raise additional debt or equity capital. There can be no assurance that we could raise additional capital. | |
During the fiscal years ended December 31, 2013 and 2012, we supplemented the financing of our capital needs primarily through debt and equity financings. Since 2008, we have maintained a credit facility with Whitney Bank, a state chartered bank (“Whitney”); see additional discussion in Note 6, “Long-Term Debt”. During the third quarter of 2013, we issued an additional 4,444 shares of common stock resulting in net cash proceeds of $7,628. As a result of our credit facility, the private placement and cash we expect to generate from operations, we believe we will have adequate liquidity to meet our future operating requirements. | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | |
The consolidated financial statements include the accounts of Deep Down and its wholly-owned subsidiaries for the years ended December 31, 2013 and 2012. All intercompany transactions and balances have been eliminated. | |
Reclassifications | |
Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications have not resulted in any changes to previously reported net income (loss) or cash flows. | |
Use of Estimates | |
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Segments | |
For the years ended December 31, 2013 and 2012, our operating segments, Deep Down Delaware and Mako have been aggregated into a single reporting segment. In August 2012, we consolidated the operations of Mako in Morgan City, Louisiana into Deep Down Delaware in Channelview, Texas. While the operating segments have different product lines, they are very similar. They are all service-based operations revolving around our personnel’s expertise in the deepwater and ultra-deepwater industry, and any equipment is produced to a customer specified design and engineered using Deep Down personnel’s expertise, with installation and project management as part of our service revenue to the customer. Additionally, the operating segments have similar customers and distribution methods, and their economic characteristics are similar with regard to their gross margin percentages. Our operations are located in the United States, although we occasionally generate sales to international customers. | |
Cash and Cash Equivalents | |
We consider all highly liquid investments with maturities from date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with domestic banks and, at times, may exceed federally insured limits. | |
Fair Value of Financial Instruments | |
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We utilize a fair value hierarchy, which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The fair value hierarchy has three levels of inputs that may be used to measure fair value: | |
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | |
Level 2 - Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. | |
Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. | |
Our financial instruments consist primarily of cash equivalents, trade receivables and payables, and debt instruments. The carrying values of cash equivalents and trade receivables and payables approximated their fair values at December 31, 2013 and 2012 due to their short-term maturities. We calculated the fair values of our debt instruments using time value of money principles, and determined their carrying values at December 31, 2013 and 2012 also approximated their fair values. | |
Accounts Receivable | |
Trade receivables are uncollateralized customer obligations due under normal trade terms. We provide an allowance for doubtful trade receivables based on a specific review of each customer’s trade receivable balance with respect to their ability to make payments. When specific accounts are determined to require an allowance, they are expensed by a provision for bad debts in that period. At December 31, 2013 and 2012, we estimated the allowance for doubtful accounts requirement to be $1,006 and $1,211, respectively. Bad debt expense totaled $61 and $1,134 for the years ended December 31, 2013 and 2012, respectively. | |
Concentration of Credit Risk | |
As of December 31, 2013, five of our customers accounted for 31 percent, 14 percent, 14 percent, 12 percent and 9 percent of total trade accounts receivable. As of December 31, 2012, five of our customers accounted for 53 percent, 7 percent, 7 percent, 6 percent and 5 percent of total trade accounts receivable. | |
For the year ended December 31, 2013, our five largest customers accounted for 38 percent, 13 percent, 11 percent, 8 percent and 7 percent of total revenues. For the year ended December 31, 2012, our four largest customers accounted for 30 percent, 15 percent, 6 percent and 5 percent of total revenues. | |
Inventory | |
Inventory, which consists of spare parts and materials used in our operations, is stated at lower of cost (first-in, first out) or net realizable value. | |
Long-Lived Assets | |
Property, plant and equipment. Property, plant and equipment is stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets. Replacements and betterments are capitalized, while maintenance and repairs are expensed as incurred. It is our policy to include amortization expense on assets acquired under capital leases with depreciation expense on owned assets. Additionally, we record depreciation and amortization expense related to revenue-generating assets as a component of cost of sales in the accompanying statements of operations. | |
Goodwill. Goodwill is the excess of cost of an acquired entity over the amounts assigned to identifiable assets acquired and liabilities assumed in a business combination. Goodwill is not subject to amortization, but is tested for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that would indicate a potential impairment. These circumstances may include an adverse change in the business climate or a change in the assessment of future operations of a reporting unit. | |
The Company assesses whether a goodwill impairment exists using both qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If, based on this qualitative assessment, it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company does not perform a quantitative assessment. | |
If the qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment or two-step impairment test is performed to determine whether goodwill impairment exists at the reporting unit. | |
The first step is to compare the estimated fair value of each reporting unit with goodwill to its carrying amount, including goodwill. To determine fair value estimates, the Company uses the income approach based on discounted cash flow analyses, combined with a market-based approach. The market-based approach considers valuation comparisons of recent public sale transactions of similar businesses and earnings multiples of publicly traded businesses operating in industries consistent with the reporting unit. If the fair value of a reporting unit is less than its carrying amount, the second step of the impairment test is performed to determine the amount of impairment loss, if any. The second step compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment loss is recognized in an amount equal to that excess. | |
There was no impairment of goodwill for the years ended December 31, 2013 and 2012. The quantitative assessment of goodwill we performed as of December 31, 2013 demonstrated that our goodwill’s fair value exceeded its carrying value by $1,350. Not achieving the financial performance estimates used in calculating the fair value may give rise to a future impairment. | |
Other intangible assets. Our other intangible assets generally consist of assets acquired related to previous business combinations and are primarily comprised of customer lists, trademarks and non-compete covenants. We amortize intangible assets over their useful lives ranging from six to twenty-five years on a straight-line basis. We make judgments and estimates in conjunction with the carrying value of these assets, including amounts to be capitalized, amortization methods, useful lives and the valuation of acquired other intangible assets. All the intangible assets of Flotation were contributed to CFT effective December 31, 2010; see additional discussion in Note 3, “Investment in Joint Venture.” | |
We test for the impairment of other intangible assets upon the occurrence of a triggering event. We base our evaluation on impairment indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If these impairment indicators are present or other factors exist that indicate the carrying amount of an asset may not be recoverable, we determine whether an impairment has occurred through the use of an undiscounted cash flows analysis of the asset at the lowest level for which identifiable cash flows exist. The undiscounted cash flow analysis consists of estimating the future cash flows that are directly associated with and expected to arise from the use and eventual disposition of the asset over its remaining useful life. These cash flows are inherently subjective and require significant estimates based upon historical experience and future expectations reflected in our budgets and internal projections. If the undiscounted cash flows do not exceed the carrying value of the long-lived asset, an impairment has occurred, and we recognize a loss for the difference between the carrying amount and the estimated fair value of the asset. The fair value of the asset is measured using quoted market prices or, in the absence of quoted market prices, is based on an estimate of discounted cash flows. Cash flows are generally discounted at an interest rate commensurate with our weighted average cost of capital for a similar asset. | |
In August 2012, we closed down our office in Morgan City, Louisiana, and consolidated the operations of Mako into Deep Down Delaware in Channelview, Texas. In November 2012, we evaluated Mako’s customer lists, trademarks and non-compete covenants in light of the consolidation and determined that these other intangible assets had no future economic benefit. As a result, in the year ended December 31, 2012, we recorded impairment expense of $2,156 primarily to fully impair the remaining carrying value of the Mako intangibles. | |
Equity Method Investments | |
Equity method investments in joint ventures are reported as investments in joint venture on the consolidated balance sheets, and our share of earnings or losses in the joint venture is reported as equity in net income or loss of joint venture in the consolidated statements of operations. | |
Lease Obligations | |
We lease land, buildings, vehicles and certain equipment under non-cancellable operating leases. Since February 2009, we have leased our corporate headquarters in Houston, Texas, under a non-cancellable operating lease. Deep Down Delaware leases indoor manufacturing space and Mako leases office, warehouse and operating space in Morgan City, Louisiana, under a non-cancellable operating lease. As a result of the consolidation of Mako’s operations into Deep Down Delaware in August 2012; in December 2012, we sub-leased this space to a third party. We also lease certain office and other operating equipment under capital leases; the related assets are included with property, plant and equipment on the consolidated balance sheets. | |
At the inception of a lease, we evaluate the agreement to determine whether the lease will be accounted for as an operating or capital lease. The term of the lease used for such an evaluation includes renewal option periods only in instances in which the exercise of the renewal option can be reasonably assured and failure to exercise such option would result in an economic penalty. | |
Revenue Recognition | |
We recognize revenue once the following four criterion are met: (i) persuasive evidence of an arrangement exists; (ii) delivery of the equipment has occurred or services have been rendered, (iii) the price of the equipment or service is fixed and determinable and (iv) collectability of the related receivable is reasonably assured. Service revenue is recognized as the service is provided, and time and materials contracts are billed on a bi-weekly or monthly basis as costs are incurred. Customer billings for shipping and handling charges are included in revenue. Revenues are recorded net of sales taxes. | |
From time to time, we enter into fixed-price contracts. The percentage-of-completion method is used as a basis for recognizing revenue on these contracts. We recognize revenue as costs are incurred because we believe the incurrence of cost reasonably reflects progress made toward project completion. | |
Provisions for estimated losses on uncompleted large fixed-price contracts (if any) are recorded in the period in which it is determined it is more likely than not a loss will be incurred. Changes in job performance, job conditions, and total contract values may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Unapproved change orders are accounted for in revenue and cost when it is probable that the costs will be recovered through a change in the contract price. In circumstances where recovery is considered probable but the revenues cannot be reliably estimated, costs attributable to change orders are deferred pending determination of contract price. | |
Costs and estimated earnings in excess of billings on uncompleted contracts arise when revenues are recorded on a percentage-of-completion basis but cannot be invoiced under the terms of the contract. Such amounts are invoiced upon completion of contractual milestones. Billings in excess of costs and estimated earnings on uncompleted contracts arise when milestone billings are permissible under the contract, but the related costs have not yet been incurred. All contract costs are recognized currently on jobs formally approved by the customer and contracts are not shown as complete until virtually all anticipated costs have been incurred and the risk of loss has passed to the customer. | |
Assets and liabilities related to costs and estimated earnings in excess of billings on uncompleted contracts, as well as liabilities related to billings in excess of costs and estimated earnings on uncompleted contracts, have been classified as current. The contract cycle for certain long-term contracts may extend beyond one year, thus complete collection of amounts related to these contracts may extend beyond one year, though such long-term contracts include contractual milestone billings as discussed above. | |
Income Taxes | |
We follow the asset and liability method of accounting for income taxes. This method takes into account the differences between financial statement treatment and tax treatment of certain transactions. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using 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 is recognized as income or expense in the period that includes the enactment date. | |
We record a valuation allowance to reduce the carrying value of our deferred tax assets when it is more likely than not that some or all of the deferred tax assets will expire before realization of the benefit or that future deductibility is not probable. The ultimate realization of the deferred tax assets depends upon our ability to generate sufficient taxable income of the appropriate character in the future. This requires management to use estimates and make assumptions regarding significant future events such as the taxability of entities operating in the various taxing jurisdictions. In evaluating our ability to recover our deferred tax assets, we consider all reasonably available positive and negative evidence, including our past operating results, the existence of cumulative losses in the most recent years and our forecast of future taxable income. In estimating future taxable income, we develop assumptions, including the amount of future state, and federal pre-tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment. When the likelihood of the realization of existing deferred tax assets changes, adjustments to the valuation allowance are charged in the period in which the determination is made, either to income or goodwill, depending upon when that portion of the valuation allowance was originally created. | |
We record an estimated tax liability or tax benefit for income and other taxes based on what we determine will likely be paid in the various tax jurisdictions in which we operate. We use our best judgment in the determination of these amounts. However, the liabilities ultimately realized and paid are dependent upon various matters, including resolution of tax audits, and may differ from amounts recorded. An adjustment to the estimated liability would be recorded as a provision or benefit to income tax expense in the period in which it becomes probable that the amount of the actual liability or benefit differs from the recorded amount. | |
Our future effective tax rates could be adversely affected by changes in the valuation of our deferred tax assets or liabilities or changes in tax laws or interpretations thereof. If and when our deferred tax assets are no longer fully reserved, we will begin to provide for taxes at the full statutory rate. In addition, we are subject to the examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. | |
Share-Based Compensation | |
We record share-based payment awards exchanged for employee service at fair value on the date of grant and expense the awards in the consolidated statements of operations over the requisite employee service period. Share-based compensation expense includes an estimate for forfeitures and is generally recognized over the expected term of the award on a straight-line basis. At December 31, 2013, we had two types of share-based employee compensation: stock options and restricted stock. In addition to employee service, the restricted stock awards also have a performance component. | |
Key assumptions used in the Black-Scholes model for stock option valuations include (1) expected volatility (2) expected term (3) discount rate and (4) expected dividend yield. Since we do not have a sufficient trading history to determine the volatility of our own stock, we based our estimates of volatility on a representative peer group consisting of companies in the same industry, with similar market capitalizations and similar stage of development. Additionally, we continue to use the simplified method related to employee option grants. | |
Earnings or Loss per Common Share | |
Basic earnings or loss per common share (“EPS”) is calculated by dividing net earnings or loss by the weighted average number of common shares outstanding for the period. Diluted EPS is calculated by dividing net earnings or loss by the weighted average number of common shares and dilutive common stock equivalents (stock options and warrants) outstanding during the period. Diluted EPS reflects the potential dilution that could occur if stock options and warrants to purchase common stock were exercised for shares of common stock. In periods where losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. | |
Recent Accounting Pronouncements | |
In July 2013, the Financial Accounting Standards Board issued accounting guidance on the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, which would be for our year ended December 31, 2014. This guidance should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of this guidance is not expected to have a significant impact on our consolidated financial position or results of operation. | |
Off-Balance Sheet Arrangements | |
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources. |
2_COSTS_ESTIMATED_EARNINGS_AND
2. COSTS, ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Costs Estimated Earnings And Billings On Uncompleted Contracts | ' | ||||||||
COSTS, ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS | ' | ||||||||
Costs, estimated earnings and billings on uncompleted contracts are summarized below: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Costs incurred on uncompleted contracts | $ | 14,496 | $ | 9,915 | |||||
Estimated earnings on uncompleted contracts | 5,539 | 4,714 | |||||||
20,035 | 14,629 | ||||||||
Less: Billings to date on uncompleted contracts | (14,389 | ) | (12,835 | ) | |||||
$ | 5,646 | $ | 1,794 | ||||||
Included in the accompanying consolidated balance sheets under the following captions: | |||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ | 5,847 | $ | 2,547 | |||||
Billings in excess of costs and estimated earnings on uncompleted contracts | (201 | ) | (753 | ) | |||||
$ | 5,646 | $ | 1,794 | ||||||
The balances in costs in excess of billings and estimated earnings on uncompleted contracts at December 31, 2013 and 2012 consisted of earned but unbilled revenues related to fixed-price projects. | |||||||||
The balances in billings in excess of costs and estimated earnings on uncompleted contracts at December 31, 2013 and 2012 consisted of unearned milestone billings related to fixed-price projects. |
3_INVESTMENT_IN_JOINT_VENTURE
3. INVESTMENT IN JOINT VENTURE | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Equity Method Investments and Joint Ventures [Abstract] | ' | ||||||||
INVESTMENT IN JOINT VENTURE | ' | ||||||||
Effective December 31, 2010, we engaged in a transaction in which all of the operating assets and substantially all of the liabilities of Flotation were contributed, along with other contributions we made, to the CFT joint venture in return for a 20 percent common unit ownership interest. | |||||||||
On October 7, 2011, CFT consummated a transaction pursuant to that certain Stock Purchase Agreement (the “Purchase Agreement”), by and between CFT and a Houston-based company (“Buyer”) pursuant to which Buyer purchased from CFT (i) all of the issued and outstanding shares of capital stock of Cuming Corporation (“Cuming”), the principal operating subsidiary of CFT, (ii) the shares of 230 Bodwell Corporation, a Massachusetts corporation and subsidiary of Cuming, and (iii) certain assets that, immediately prior to closing, were acquired by Cuming, for a purchase price of $60,000 (less certain debt and subject to purchase price adjustment for working capital and potential earn-out payments). We are entitled to 20 percent of future earn-out proceeds from the sale. | |||||||||
The components of our Investment in joint venture are summarized below: | |||||||||
Investment in joint venture, December 31, 2011 | $ | 1,163 | |||||||
Equity in net loss of CFT for the year ended December 31, 2012 | (179 | ) | |||||||
Investment in joint venture, December 31, 2012 | $ | 984 | |||||||
Equity in net loss of CFT for the year ended December 31, 2013 | (16 | ) | |||||||
Cash distribution from CFT for the year ended December 31, 2013 | (500 | ) | |||||||
Investment in joint venture, December 31, 2013 | $ | 468 | |||||||
Below are unaudited condensed statements of operations data of CFT for the years ended December 31, 2013 and 2012: | |||||||||
Year Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Revenues | $ | – | $ | 2,744 | |||||
Gross profit | $ | – | $ | 518 | |||||
Net loss | $ | (80 | ) | $ | (895 | ) | |||
Below are unaudited condensed consolidated balance sheets of CFT as of December 31, 2013 and December 31, 2012: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Current assets | $ | 863 | $ | 5,749 | |||||
Property, plant and equipment, net | 1,527 | 1,675 | |||||||
Total assets | $ | 2,390 | $ | 7,424 | |||||
Current liabilities | $ | 51 | $ | 2,500 | |||||
Equity | 2,339 | 4,924 | |||||||
Total liabilities and equity | $ | 2,390 | $ | 7,424 |
4_PROPERTY_PLANT_AND_EQUIPMENT
4. PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||||||
PROPERTY, PLANT AND EQUIPMENT | ' | ||||||||||||
Property, plant and equipment consisted of the following as of December 31, 2013 and 2012: | |||||||||||||
31-Dec-13 | 31-Dec-12 | Range of Asset Lives | |||||||||||
Land | $ | 1,582 | $ | 1,582 | – | ||||||||
Buildings and improvements | 1,571 | 1,555 | 7 - 36 years | ||||||||||
Leasehold improvements | 602 | 221 | 2 - 5 years | ||||||||||
Equipment | 17,840 | 14,251 | 2 - 30 years | ||||||||||
Furniture, computers and office equipment | 1,329 | 1,248 | 2 - 8 years | ||||||||||
Construction in progress | 189 | 487 | – | ||||||||||
Total property, plant and equipment | 23,113 | 19,344 | |||||||||||
Less: Accumulated depreciation and amortization | (7,718 | ) | (6,241 | ) | |||||||||
Property, plant and equipment, net | $ | 15,395 | $ | 13,103 | |||||||||
Included in property, plant and equipment are assets under capital lease of $253 and $1,493 at December 31, 2013 and 2012, respectively, with related accumulated amortization of $55 and $133 at December 31, 2013 and 2012, respectively. | |||||||||||||
Depreciation expense excluded from cost of sales in the accompanying consolidated statements of operations was $139 and $140 for the years ended December 31, 2013 and 2012, respectively. Depreciation expense included in cost of sales in the accompanying consolidated statements of operations was $1,425 and $1,317 for the years ended December 31, 2013 and 2012, respectively. | |||||||||||||
At December 31, 2013 and 2012, construction in progress represents assets that are not ready for service or are in the construction stage. We will begin depreciating these assets once they are placed in service. |
5_GOODWILL_AND_OTHER_INTANGIBL
5. GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended | ||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | ' | ||||||||||||||||||||||||||
Goodwill | |||||||||||||||||||||||||||
Goodwill represents the excess of the cost over the net tangible and identifiable intangible assets of acquired businesses. | |||||||||||||||||||||||||||
At December 31, 2013 and 2012, our management completed the annual impairment test of goodwill. There was no impairment indicated at December 31, 2013 or 2012. | |||||||||||||||||||||||||||
Other Intangible Assets | |||||||||||||||||||||||||||
Identifiable intangible assets acquired in business combinations are recorded based upon fair market value at the date of acquisition. Amounts allocated to intangible assets are amortized on a straight-line basis over their estimated useful lives. Estimated intangible asset values, net of accumulated amortization include the following: | |||||||||||||||||||||||||||
31-Dec-13 | 31-Dec-12 | ||||||||||||||||||||||||||
Estimated | Gross Carrying | Accumulated | Net Carrying | Gross Carrying | Accumulated | Net Carrying | |||||||||||||||||||||
Useful Life | Amount | Amortization | Amount | Amount | Amortization | Amount | |||||||||||||||||||||
Patents | 17 Years | 138 | (19 | ) | 119 | 138 | (12 | ) | 126 | ||||||||||||||||||
Total | $ | 138 | $ | (19 | ) | $ | 119 | $ | 138 | $ | (12 | ) | $ | 126 | |||||||||||||
In August 2012, we closed down our office in Morgan City, Louisiana, and consolidated the operations of Mako into Deep Down Delaware in Channelview, Texas. In November 2012, we evaluated Mako’s customer lists, trademarks and non-compete covenants in light of the consolidation and determined that these long-lived assets had no future economic benefit. As a result, in the year ended December 31, 2012, we recorded impairment expense of $2,156 primarily to fully impair the remaining carrying value of the Mako other intangibles. There was no impairment of other intangible assets for the year ended December 31, 2013. | |||||||||||||||||||||||||||
Amortization expense is estimated to be an average of $6 over each of the next five years. |
6_LONGTERM_DEBT
6. LONG-TERM DEBT | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
LONG-TERM DEBT | ' | ||||||||
Long-term debt consisted of the following: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Secured credit agreement - Whitney Bank | $ | 1,917 | $ | 2,909 | |||||
Note payable | 2,906 | – | |||||||
Capital lease obligations | 111 | 707 | |||||||
Total long-term debt | 4,934 | 3,616 | |||||||
Less: Current portion of long-term debt | (1,716 | ) | (680 | ) | |||||
Long-term debt, net of current portion | $ | 3,218 | $ | 2,936 | |||||
Whitney Credit Agreement | |||||||||
Since 2008, we have maintained a credit facility (the “Facility”) with Whitney Bank, a state chartered bank (“Whitney”). The Facility has been amended and restated several times, most recently on March 5, 2013. The current relevant terms of the Facility include: | |||||||||
· | a committed amount under the revolving credit facility (“Revolving Credit Facility”) of $5,000, at an interest rate of 4.0 percent annum, maturing April 15, 2014; | ||||||||
· | a real estate term facility (“RE Term Facility”) of $2,000, at an interest rate of 4.0 percent annum, maturing April 15, 2018, with the Company obligated to make monthly increasing repayments of principal (along with accrued and unpaid interest thereon) starting at $8, beginning April 1, 2013; and | ||||||||
· | outstanding balances under the Facility are secured by all of the Company’s assets. | ||||||||
As of December 31, 2013, the Company’s indebtedness under the Revolving Credit Facility and the RE Term Facility was $0 and $1,917, respectively. We are currently in negotiations with Whitney for an extension of the Revolving Credit Facility beyond the current April 15, 2014 maturity. We are confident that we will be able to reach an agreement regarding this extension on or before April 15, 2014. | |||||||||
Our credit agreement with Whitney obligates us to comply with the following financial covenants: | |||||||||
· | Leverage Ratio - The ratio of total debt to consolidated EBITDA must be less than 3.0 to 1.0; actual Leverage Ratio as of December 31, 2013: 2.78 to 1.0. | ||||||||
· | Fixed Charge Coverage Ratio - The ratio of consolidated EBITDA to consolidated net interest expense, plus principal payments on total debt, must be greater than 1.5 to 1.0; actual Fixed Charge Coverage Ratio as of December 31, 2013: 1.51 to 1.0. | ||||||||
· | Tangible Net Worth - Our consolidated net worth, after deducting other assets as are properly classified as “intangible assets,” plus 50 percent of net income, after provision for taxes, must be in excess of $13,000; actual Tangible Net Worth as of December 31, 2013: $25,344. | ||||||||
· | Moreover, we continue to have obligations for other covenants, including, among others, limitations on issuance of common stock, liens, transactions with affiliates, additional indebtedness and permitted investments. | ||||||||
As of December 31, 2013 and 2012, we were in compliance with all of the covenants. | |||||||||
Other Debt | |||||||||
On November 5, 2013, we entered into a Purchase and Sale Agreement (“PSA”) with a customer to buy back a 3.5 metric ton portable umbilical carousel, which we had fabricated specifically for this customer. The PSA calls for purchase price of $3,293 to be paid in 24 monthly installments of $137.2, commencing November 5, 2013 through October 5, 2015. The obligation is non-interest bearing. The balance of this debt at December 31, 2013 was $2,906. | |||||||||
Debt Maturities | |||||||||
Maturities of long-term debt as of December 31, 2013 were as follows: | |||||||||
Debt Maturities | |||||||||
Years ending December 31,: | |||||||||
2014 | $ | 1,716 | |||||||
2015 | 1,510 | ||||||||
2016 | 111 | ||||||||
2017 | 116 | ||||||||
2018 | 1,481 | ||||||||
$ | 4,934 | ||||||||
7_EARNINGS_OR_LOSS_PER_COMMON_
7. EARNINGS OR LOSS PER COMMON SHARE | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Net loss per share: | ' | ||||||||
EARNINGS OR LOSS PER COMMON SHARE | ' | ||||||||
The following is a reconciliation of the number of shares used in the basic and diluted net earnings or loss per common share calculation: | |||||||||
Year Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Numerator: | |||||||||
Net loss | $ | (595 | ) | $ | (2,454 | ) | |||
Denominator: | |||||||||
Weighted average number of common shares outstanding | 11,858 | 10,185 | |||||||
Effect of dilutive securities | 2 | – | |||||||
Denominator for diluted earnings per share | 11,860 | 10,185 | |||||||
Net (loss) income per common share outstanding, basic and diluted | $ | (0.05 | ) | $ | (0.24 | ) | |||
At December 31, 2013 and 2012, there were outstanding warrants convertible to 0 and 6 shares of common stock, respectively. At December 31, 2013 and 2012, there were outstanding stock options convertible to 945 and 1,008 shares of common stock, respectively. |
8_SHAREBASED_COMPENSATION
8. SHARE-BASED COMPENSATION | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||
SHARE-BASED COMPENSATION | ' | ||||||||||||||
We have a share-based compensation plan, the “2003 Directors, Officers and Consultants Stock Option, Stock Warrant and Stock Award Plan” (the “Plan”). Awards of stock options and stock granted under the Plan have vesting periods of three years. Some awards of stock have performance criteria as an additional condition of vesting. Once vested, stock options may be exercised for up to five years. Share-based compensation expense related to awards is based on the fair value at the date of grant, and is recognized over the vesting periods, net of estimated forfeitures. The value of performance-based awards is recognized as expense only when it is considered probable that the performance criteria will be met. Under the Plan, the total number of options permitted is 15 percent of issued and outstanding common shares. | |||||||||||||||
Summary of Shares of Restricted Stock | |||||||||||||||
For the years ended December 31, 2013 and 2012, we recognized a total of $460 and $213, respectively, of share-based compensation expense related to restricted stock awards, which is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. The unamortized estimated fair value of restricted stock awards was $980 at December 31, 2013. | |||||||||||||||
The following table summarizes the activity of our restricted stock for the years ended December 31, 2013 and 2012. The aggregate intrinsic value is based upon the closing price of $2.06 of our common stock on December 31, 2013. | |||||||||||||||
Restricted Shares | Weighted-Average Grant-Date Fair Value | Aggregate Intrinsic Value | |||||||||||||
Outstanding at December 31, 2011 | 400 | $ | 1.8 | $ | 400 | ||||||||||
Forfeited | (17 | ) | 1.8 | ||||||||||||
Vested | (8 | ) | 1.8 | ||||||||||||
Outstanding at December 31, 2012 | 375 | $ | 1.8 | $ | 488 | ||||||||||
Granted | 730 | 2.03 | |||||||||||||
Forfeited | (33 | ) | 1.8 | ||||||||||||
Vested | (17 | ) | 1.8 | ||||||||||||
Outstanding at December 31, 2013 | 1,055 | $ | 1.96 | $ | 2,173 | ||||||||||
Summary of Stock Options | |||||||||||||||
Based on the shares of common stock outstanding at December 31, 2013, there were approximately 2,289 options available for grant under the Plan as of that date. We expense all stock options on a straight-line basis, net of forfeitures, over the requisite expected service periods. We determine the fair value of stock options on the date of the grant using the Black-Scholes option pricing model. | |||||||||||||||
For the years ended December 31, 2013 and 2012, we recognized a total of $150 and $341, respectively, of share-based compensation expense related to outstanding stock option awards, which is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. The unamortized portion of the estimated fair value of outstanding stock options was $44 at December 31, 2013. | |||||||||||||||
The following table summarizes our stock option activity for the years ended December 31, 2013 and 2012: | |||||||||||||||
In thousands, except per share amounts | Shares Underlying Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (in years) | ||||||||||||
Outstanding at December 31, 2011 | 1,063 | $ | 2 | 2.4 | |||||||||||
Cancellations & Forfeitures | (55 | ) | 2.19 | ||||||||||||
Outstanding at December 31, 2012 | 1,008 | $ | 2 | 2.4 | |||||||||||
Cancellations & Forfeitures | (63 | ) | 1.93 | ||||||||||||
Outstanding at December 31, 2013 | 945 | $ | 1.98 | 1.3 | |||||||||||
Exercisable at December 31, 2013 | 837 | $ | 2.01 | 1.2 | |||||||||||
The aggregate intrinsic value is based on the closing price of $2.06 on December 31, 2013. As of December 31, 2013, the aggregate intrinsic value of stock options outstanding and stock options exercisable was $76. The total fair value of stock options vested during the year ended December 31, 2013 was $42. The following summarizes our outstanding options and their respective exercise prices at December 31, 2013: | |||||||||||||||
Exercise Price | Shares | ||||||||||||||
Underlying | |||||||||||||||
Options | |||||||||||||||
$1.80 | 325 | ||||||||||||||
$2.00 | 500 | ||||||||||||||
$2.40 | 120 | ||||||||||||||
945 |
9_WARRANTS
9. WARRANTS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Warrants and Rights Note Disclosure [Abstract] | ' | ||||||||||||||||
WARRANTS | ' | ||||||||||||||||
We have issued warrants related to various transactions in previous years; a summary of warrant transactions follows for the year ended December 31, 2013. The aggregate intrinsic value is based on the closing price of $2.06 on December 31, 2013. | |||||||||||||||||
Shares Underlying Warrants | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (in years) | Aggregate | ||||||||||||||
Intrinsic Value (In-The-Money) | |||||||||||||||||
Outstanding and exercisable at December 31, 2012 | 6 | $ | 20.2 | – | $ | – | |||||||||||
Outstanding and exercisable at December 31, 2013 | – | $ | – | – | $ | – | |||||||||||
10_COMMON_STOCK
10. COMMON STOCK | 12 Months Ended |
Dec. 31, 2013 | |
Stockholders' equity: | ' |
COMMON STOCK | ' |
On July 17, 2012, we filed a Certificate of Change with the Nevada Secretary of State for the purposes of reducing the number of authorized and outstanding shares of the Company’s common stock, on a basis of one share of common stock for each twenty shares of common stock outstanding (the “Reverse Stock Split”). The change was effective as of July 18, 2012. | |
During the third quarter of 2013, we issued an additional 4,444 shares of common stock resulting in net cash proceeds of $7,628. |
6_INCOME_TAXES
6. INCOME TAXES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
INCOME TAXES | ' | ||||||||
The provision for income taxes is comprised of the following for the years ended December 31, 2013 and 2012. | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Federal: | |||||||||
Current | $ | -4 | $ | 15 | |||||
Deferred | (36 | ) | (520 | ) | |||||
Total | $ | (40 | ) | $ | (505 | ) | |||
State: | |||||||||
Current | $ | (14 | ) | $ | 37 | ||||
Deferred | 36 | 520 | |||||||
Total | $ | 22 | $ | 557 | |||||
Total income tax expense (benefit) | $ | (18 | ) | $ | 52 | ||||
The provision for income taxes differs from the amount computed by applying the U.S. statutory income tax rate before income taxes for the reasons set forth below for the years ended December 31, 2013 and 2012. | |||||||||
Year Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Income tax expense at federal statutory rate | 34.00% | 34.00% | |||||||
State taxes, net of federal expense | -4.32% | -21.53% | |||||||
Return to provision adjustments | 47.30% | 24.30% | |||||||
Valuation allowance | -67.93% | -36.39% | |||||||
Permanent differences | -6.03% | -2.57% | |||||||
Total effective rate | 3.02% | -2.19% | |||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as operating loss and tax credit carry forwards. The tax effects of the temporary differences and carry forwards are as follow at December 31, 2013 and 2012: | |||||||||
Year Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Deferred tax assets: | |||||||||
Allowance for doubtful accounts | $ | 198 | $ | 353 | |||||
Net operating loss | 5,258 | 4,249 | |||||||
Share-based compensation | 1,140 | 990 | |||||||
Investment in joint venture | 4,599 | 4,700 | |||||||
Other | 90 | 122 | |||||||
Total deferred tax assets | $ | 11,285 | $ | 10,414 | |||||
Deferred tax liabilities: | |||||||||
Depreciation and amortization on property, plant and equipment | $ | (2,797 | ) | $ | (2,360 | ) | |||
Amortization of intangibles | (59 | ) | (41 | ) | |||||
Total deferred tax liabilities | $ | (2,856 | ) | $ | (2,401 | ) | |||
Less: valuation allowance | (8,429 | ) | (8,013 | ) | |||||
Net deferred tax position | $ | – | $ | – | |||||
We have $15,444 in net operating loss (“NOL”) carry forwards available to offset future taxable income. These federal NOL’s will expire at various dates through 2028. Management analyzed its current operating results and future projections and determined that a full valuation allowance was needed due to our cumulative losses in recent years. We have no uncertain tax positions at December 31, 2013. Our tax returns from the tax years ended December 31, 2009 through December 31, 2012 are open to examination by the IRS. |
12_COMMITMENTS_AND_CONTINGENCI
12. COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||
COMMITMENTS AND CONTINGENCIES | ' | ||||||||
Litigation | |||||||||
We are from time to time involved in legal proceedings arising from the normal course of business. As of the date of this Report, we are not currently involved in any material legal proceedings. | |||||||||
Operating Leases | |||||||||
We lease certain offices, facilities, equipment and vehicles under non-cancellable operating and capital leases expiring at various dates through 2016. | |||||||||
At December 31, 2013, future minimum contractual lease obligations were as follows: | |||||||||
Years ending December 31,: | Capital Leases | Operating Leases | |||||||
2014 | $ | 63 | $ | 1,346 | |||||
2015 | 58 | 1,348 | |||||||
2016 | – | 1,246 | |||||||
2017 | – | 1,080 | |||||||
2018 | – | 1,080 | |||||||
Thereafter | – | 4,770 | |||||||
Total minimum lease payments | $ | 121 | $ | 10,870 | |||||
Residual principal balance | – | ||||||||
Amount representing interest | (10 | ) | |||||||
Present value of minimum lease payments | $ | 111 | |||||||
Less current maturities of capital lease obligations | (55 | ) | |||||||
Long-term contractual obligations | $ | 56 | |||||||
Rent expense for the years ended December 31, 2013 and 2012 was $1,007 and $498, respectively. | |||||||||
Letters of Credit | |||||||||
Certain customers could require us to issue standby letters of credit in the normal course of business to ensure performance under terms of contracts or as a form of product warranty. The beneficiary of a letter of credit could demand payment from the issuing bank for the amount of the outstanding letter of credit. Letters of credit outstanding at December 31, 2013 and 2012 under the Fifth Amendment with Whitney are as follows: | |||||||||
Type | 31-Dec-13 | 31-Dec-12 | |||||||
Performance | $ | – | $ | 235 | |||||
Warranty | 415 | 592 | |||||||
Total | $ | 415 | $ | 827 | |||||
Employment Agreements | |||||||||
Certain of our Executives are employed under employment agreements containing severance provisions. In the event of termination of an Executive’s employment for any reason, the Executive will be entitled to receive all accrued, unpaid salary and vacation time through the date of termination and all benefits to which the Executive is entitled or vested under the terms of all employee benefit and compensation plans, agreements and arrangements in which the Executive is a participant as of the date of termination. | |||||||||
In addition, subject to executing a general release in favor of the Company, the Executive will be entitled to receive certain severance payments in the event his employment is terminated by the Company “other than for cause” or by the Executive with “good reason.” These severance payments include: (i) a lump sum in cash equal to one to three times the Executive’s annual base salary; ii) a lump sum in cash equal to one to two times the average annual bonus paid to the Executive for the prior two full fiscal years preceding the date of termination; (iii) a lump sum in cash equal to a pro rata portion of the annual bonus payable for the period in which the date of termination occurs based on the actual performance under the Company’s annual incentive bonus arrangement, but no less than fifty percent of Executive’s annual base salary; and (iv) if the Executive’s termination occurs prior to the date that is twelve months following a change of control, then each and every share option, restricted share award and other equity-based award that is outstanding and held by the Executive shall immediately vest and become exercisable. |
13_RELATED_PARTY_TRANSACTIONS
13. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
RELATED PARTY TRANSACTIONS | ' |
We have a fabrication facility located in Cleveland, Texas on property currently owned by one of our employees (and who is not one of our “named executive officers”). In October 2012, we reached an understanding with the owner of the property to purchase the property for aggregate consideration of $500. The property includes 15 acres of land, and currently contains residential buildings, recreational facilities and livestock. We plan to expand the fabrication facility in order to increase our production capacity at such location, use the residential buildings at such location to house employees and contractors for projects being conducted at the site, and otherwise use the facilities at the site for general corporate purposes. | |
Although the transaction had yet to be consummated, we took possession of the property in October 2012, and had paid the full purchase price of $500 by December 31, 2013. These payments have been accounted for in our financial statements as purchase deposits. We hope to consummate the transaction within sixty days of the date of this Report. |
1_BASIS_OF_PRESENTATION_Polici
1. BASIS OF PRESENTATION (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
Description of Business | ' |
Deep Down, Inc., a Nevada corporation (“Deep Down Nevada”), and its wholly-owned subsidiaries, Deep Down, Inc., a Delaware corporation (“Deep Down Delaware”); Mako Technologies, LLC, a Nevada limited-liability company (“Mako”) (operations consolidated into Deep Down Delaware in August 2012); Flotation Technologies, Inc., a Maine corporation (dissolved in August 2012), Deep Down International Holdings, LLC, a Nevada limited-liability company, and Deep Down Brasil, Ltda., a Brazil limited liability company (“Deep Down Brasil”), (collectively referred to as “Deep Down”, “we”, “us” or the “Company”) is an oilfield services company specializing in complex deepwater and ultra-deepwater oil production distribution system support services, serving the worldwide offshore exploration and production industry. Our services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, flotation and Remote Operated Vehicles (“ROVs”) and related services. We support subsea engineering, installation, commissioning, and maintenance projects through specialized, highly experienced service teams and engineered technological solutions. Deep Down’s primary focus is on more complex deepwater and ultra-deepwater oil production distribution system support services and technologies, used between the platform and the wellhead. | |
Additionally in August 2012, we consolidated the operations of Mako in Morgan City, Louisiana into Deep Down Delaware in Channelview, Texas. | |
Liquidity | ' |
As a deepwater service provider, our revenues, profitability, cash flows, and future rate of growth are substantially dependent on the condition of the global oil and gas industry generally, and our customers’ ability to invest capital for offshore exploration, drilling and production and maintain or increase levels of expenditures for maintenance of offshore drilling and production facilities. Oil and gas prices and the level of offshore drilling and production activity have historically been characterized by significant volatility. We enter into large, fixed-price contracts which may require significant lead time and investment. A decline in offshore drilling and production activity could result in lower contract volume or delays in significant contracts which could negatively impact our earnings and cash flows. Our earnings and cash flows could also be negatively affected by delays in payments by significant customers or delays in completion of our contracts for any reason. While our objective is to enter into contracts with our customers that are cash flow positive, we may not always be able to achieve this objective. We are dependent on our cash flows from operations to fund our working capital requirements and the uncertainties noted above create risks that we may not achieve our planned earnings or cash flow from operations, which may require us to raise additional debt or equity capital. There can be no assurance that we could raise additional capital. | |
During the fiscal years ended December 31, 2013 and 2012, we supplemented the financing of our capital needs primarily through debt and equity financings. Since 2008, we have maintained a credit facility with Whitney Bank, a state chartered bank (“Whitney”); see additional discussion in Note 6, “Long-Term Debt”. During the third quarter of 2013, we issued an additional 4,444 shares of common stock resulting in net cash proceeds of $7,628. As a result of our credit facility, the private placement and cash we expect to generate from operations, we believe we will have adequate liquidity to meet our future operating requirements. | |
Principles of Consolidation | ' |
The consolidated financial statements include the accounts of Deep Down and its wholly-owned subsidiaries for the years ended December 31, 2013 and 2012. All intercompany transactions and balances have been eliminated. | |
Reclassifications | ' |
Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications have not resulted in any changes to previously reported net income (loss) or cash flows. | |
Use of Estimates | ' |
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |
Segments | ' |
For the years ended December 31, 2013 and 2012, our operating segments, Deep Down Delaware and Mako have been aggregated into a single reporting segment. In August 2012, we consolidated the operations of Mako in Morgan City, Louisiana into Deep Down Delaware in Channelview, Texas. While the operating segments have different product lines, they are very similar. They are all service-based operations revolving around our personnel’s expertise in the deepwater and ultra-deepwater industry, and any equipment is produced to a customer specified design and engineered using Deep Down personnel’s expertise, with installation and project management as part of our service revenue to the customer. Additionally, the operating segments have similar customers and distribution methods, and their economic characteristics are similar with regard to their gross margin percentages. Our operations are located in the United States, although we occasionally generate sales to international customers. | |
Cash and Cash Equivalents | ' |
We consider all highly liquid investments with maturities from date of purchase of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit with domestic banks and, at times, may exceed federally insured limits. | |
Fair Value of Financial Instruments | ' |
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We utilize a fair value hierarchy, which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The fair value hierarchy has three levels of inputs that may be used to measure fair value: | |
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | |
Level 2 - Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. | |
Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable. | |
Our financial instruments consist primarily of cash equivalents, trade receivables and payables, and debt instruments. The carrying values of cash equivalents and trade receivables and payables approximated their fair values at December 31, 2013 and 2012 due to their short-term maturities. We calculated the fair values of our debt instruments using time value of money principles, and determined their carrying values at December 31, 2013 and 2012 also approximated their fair values. | |
Accounts Receivable | ' |
Trade receivables are uncollateralized customer obligations due under normal trade terms. We provide an allowance for doubtful trade receivables based on a specific review of each customer’s trade receivable balance with respect to their ability to make payments. When specific accounts are determined to require an allowance, they are expensed by a provision for bad debts in that period. At December 31, 2013 and 2012, we estimated the allowance for doubtful accounts requirement to be $1,006 and $1,211, respectively. Bad debt expense totaled $61 and $1,134 for the years ended December 31, 2013 and 2012, respectively. | |
Concentration of Credit Risk | ' |
As of December 31, 2013, five of our customers accounted for 31 percent, 14 percent, 14 percent, 12 percent and 9 percent of total trade accounts receivable. As of December 31, 2012, five of our customers accounted for 53 percent, 7 percent, 7 percent, 6 percent and 5 percent of total trade accounts receivable. | |
For the year ended December 31, 2013, our five largest customers accounted for 38 percent, 13 percent, 11 percent, 8 percent and 7 percent of total revenues. For the year ended December 31, 2012, our four largest customers accounted for 30 percent, 15 percent, 6 percent and 5 percent of total revenues. | |
Inventory | ' |
Inventory, which consists of spare parts and materials used in our operations, is stated at lower of cost (first-in, first out) or net realizable value. | |
Long-Lived Assets | ' |
Property, plant and equipment. Property, plant and equipment is stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets. Replacements and betterments are capitalized, while maintenance and repairs are expensed as incurred. It is our policy to include amortization expense on assets acquired under capital leases with depreciation expense on owned assets. Additionally, we record depreciation and amortization expense related to revenue-generating assets as a component of cost of sales in the accompanying statements of operations. | |
Goodwill. Goodwill is the excess of cost of an acquired entity over the amounts assigned to identifiable assets acquired and liabilities assumed in a business combination. Goodwill is not subject to amortization, but is tested for impairment annually during the fourth quarter, or more frequently if an event occurs or circumstances change that would indicate a potential impairment. These circumstances may include an adverse change in the business climate or a change in the assessment of future operations of a reporting unit. | |
The Company assesses whether a goodwill impairment exists using both qualitative and quantitative assessments. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If, based on this qualitative assessment, it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company does not perform a quantitative assessment. | |
If the qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount or if the Company elects not to perform a qualitative assessment, a quantitative assessment or two-step impairment test is performed to determine whether goodwill impairment exists at the reporting unit. | |
The first step is to compare the estimated fair value of each reporting unit with goodwill to its carrying amount, including goodwill. To determine fair value estimates, the Company uses the income approach based on discounted cash flow analyses, combined with a market-based approach. The market-based approach considers valuation comparisons of recent public sale transactions of similar businesses and earnings multiples of publicly traded businesses operating in industries consistent with the reporting unit. If the fair value of a reporting unit is less than its carrying amount, the second step of the impairment test is performed to determine the amount of impairment loss, if any. The second step compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment loss is recognized in an amount equal to that excess. | |
There was no impairment of goodwill for the years ended December 31, 2013 and 2012. The quantitative assessment of goodwill we performed as of December 31, 2013 demonstrated that our goodwill’s fair value exceeded its carrying value by $1,350. Not achieving the financial performance estimates used in calculating the fair value may give rise to a future impairment. | |
Other intangible assets. Our other intangible assets generally consist of assets acquired related to previous business combinations and are primarily comprised of customer lists, trademarks and non-compete covenants. We amortize intangible assets over their useful lives ranging from six to twenty-five years on a straight-line basis. We make judgments and estimates in conjunction with the carrying value of these assets, including amounts to be capitalized, amortization methods, useful lives and the valuation of acquired other intangible assets. All the intangible assets of Flotation were contributed to CFT effective December 31, 2010; see additional discussion in Note 3, “Investment in Joint Venture.” | |
We test for the impairment of other intangible assets upon the occurrence of a triggering event. We base our evaluation on impairment indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present. If these impairment indicators are present or other factors exist that indicate the carrying amount of an asset may not be recoverable, we determine whether an impairment has occurred through the use of an undiscounted cash flows analysis of the asset at the lowest level for which identifiable cash flows exist. The undiscounted cash flow analysis consists of estimating the future cash flows that are directly associated with and expected to arise from the use and eventual disposition of the asset over its remaining useful life. These cash flows are inherently subjective and require significant estimates based upon historical experience and future expectations reflected in our budgets and internal projections. If the undiscounted cash flows do not exceed the carrying value of the long-lived asset, an impairment has occurred, and we recognize a loss for the difference between the carrying amount and the estimated fair value of the asset. The fair value of the asset is measured using quoted market prices or, in the absence of quoted market prices, is based on an estimate of discounted cash flows. Cash flows are generally discounted at an interest rate commensurate with our weighted average cost of capital for a similar asset. | |
In August 2012, we closed down our office in Morgan City, Louisiana, and consolidated the operations of Mako into Deep Down Delaware in Channelview, Texas. In November 2012, we evaluated Mako’s customer lists, trademarks and non-compete covenants in light of the consolidation and determined that these other intangible assets had no future economic benefit. As a result, in the year ended December 31, 2012, we recorded impairment expense of $2,156 primarily to fully impair the remaining carrying value of the Mako intangibles. | |
Equity Method Investments | ' |
Equity method investments in joint ventures are reported as investments in joint venture on the consolidated balance sheets, and our share of earnings or losses in the joint venture is reported as equity in net income or loss of joint venture in the consolidated statements of operations. | |
Lease Obligations | ' |
We lease land, buildings, vehicles and certain equipment under non-cancellable operating leases. Since February 2009, we have leased our corporate headquarters in Houston, Texas, under a non-cancellable operating lease. Deep Down Delaware leases indoor manufacturing space and Mako leases office, warehouse and operating space in Morgan City, Louisiana, under a non-cancellable operating lease. As a result of the consolidation of Mako’s operations into Deep Down Delaware in August 2012; in December 2012, we sub-leased this space to a third party. We also lease certain office and other operating equipment under capital leases; the related assets are included with property, plant and equipment on the consolidated balance sheets. | |
At the inception of a lease, we evaluate the agreement to determine whether the lease will be accounted for as an operating or capital lease. The term of the lease used for such an evaluation includes renewal option periods only in instances in which the exercise of the renewal option can be reasonably assured and failure to exercise such option would result in an economic penalty. | |
Revenue Recognition | ' |
We recognize revenue once the following four criterion are met: (i) persuasive evidence of an arrangement exists; (ii) delivery of the equipment has occurred or services have been rendered, (iii) the price of the equipment or service is fixed and determinable and (iv) collectability of the related receivable is reasonably assured. Service revenue is recognized as the service is provided, and time and materials contracts are billed on a bi-weekly or monthly basis as costs are incurred. Customer billings for shipping and handling charges are included in revenue. Revenues are recorded net of sales taxes. | |
From time to time, we enter into fixed-price contracts. The percentage-of-completion method is used as a basis for recognizing revenue on these contracts. We recognize revenue as costs are incurred because we believe the incurrence of cost reasonably reflects progress made toward project completion. | |
Provisions for estimated losses on uncompleted large fixed-price contracts (if any) are recorded in the period in which it is determined it is more likely than not a loss will be incurred. Changes in job performance, job conditions, and total contract values may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Unapproved change orders are accounted for in revenue and cost when it is probable that the costs will be recovered through a change in the contract price. In circumstances where recovery is considered probable but the revenues cannot be reliably estimated, costs attributable to change orders are deferred pending determination of contract price. | |
Costs and estimated earnings in excess of billings on uncompleted contracts arise when revenues are recorded on a percentage-of-completion basis but cannot be invoiced under the terms of the contract. Such amounts are invoiced upon completion of contractual milestones. Billings in excess of costs and estimated earnings on uncompleted contracts arise when milestone billings are permissible under the contract, but the related costs have not yet been incurred. All contract costs are recognized currently on jobs formally approved by the customer and contracts are not shown as complete until virtually all anticipated costs have been incurred and the risk of loss has passed to the customer. | |
Assets and liabilities related to costs and estimated earnings in excess of billings on uncompleted contracts, as well as liabilities related to billings in excess of costs and estimated earnings on uncompleted contracts, have been classified as current. The contract cycle for certain long-term contracts may extend beyond one year, thus complete collection of amounts related to these contracts may extend beyond one year, though such long-term contracts include contractual milestone billings as discussed above. | |
Income Taxes | ' |
We follow the asset and liability method of accounting for income taxes. This method takes into account the differences between financial statement treatment and tax treatment of certain transactions. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using 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 is recognized as income or expense in the period that includes the enactment date. | |
We record a valuation allowance to reduce the carrying value of our deferred tax assets when it is more likely than not that some or all of the deferred tax assets will expire before realization of the benefit or that future deductibility is not probable. The ultimate realization of the deferred tax assets depends upon our ability to generate sufficient taxable income of the appropriate character in the future. This requires management to use estimates and make assumptions regarding significant future events such as the taxability of entities operating in the various taxing jurisdictions. In evaluating our ability to recover our deferred tax assets, we consider all reasonably available positive and negative evidence, including our past operating results, the existence of cumulative losses in the most recent years and our forecast of future taxable income. In estimating future taxable income, we develop assumptions, including the amount of future state, and federal pre-tax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment. When the likelihood of the realization of existing deferred tax assets changes, adjustments to the valuation allowance are charged in the period in which the determination is made, either to income or goodwill, depending upon when that portion of the valuation allowance was originally created. | |
We record an estimated tax liability or tax benefit for income and other taxes based on what we determine will likely be paid in the various tax jurisdictions in which we operate. We use our best judgment in the determination of these amounts. However, the liabilities ultimately realized and paid are dependent upon various matters, including resolution of tax audits, and may differ from amounts recorded. An adjustment to the estimated liability would be recorded as a provision or benefit to income tax expense in the period in which it becomes probable that the amount of the actual liability or benefit differs from the recorded amount. | |
Our future effective tax rates could be adversely affected by changes in the valuation of our deferred tax assets or liabilities or changes in tax laws or interpretations thereof. If and when our deferred tax assets are no longer fully reserved, we will begin to provide for taxes at the full statutory rate. In addition, we are subject to the examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. | |
Share-Based Compensation | ' |
We record share-based payment awards exchanged for employee service at fair value on the date of grant and expense the awards in the consolidated statements of operations over the requisite employee service period. Share-based compensation expense includes an estimate for forfeitures and is generally recognized over the expected term of the award on a straight-line basis. At December 31, 2013, we had two types of share-based employee compensation: stock options and restricted stock. In addition to employee service, the restricted stock awards also have a performance component. | |
Key assumptions used in the Black-Scholes model for stock option valuations include (1) expected volatility (2) expected term (3) discount rate and (4) expected dividend yield. Since we do not have a sufficient trading history to determine the volatility of our own stock, we based our estimates of volatility on a representative peer group consisting of companies in the same industry, with similar market capitalizations and similar stage of development. Additionally, we continue to use the simplified method related to employee option grants. | |
Earnings or Loss per Common Share | ' |
Basic earnings or loss per common share (“EPS”) is calculated by dividing net earnings or loss by the weighted average number of common shares outstanding for the period. Diluted EPS is calculated by dividing net earnings or loss by the weighted average number of common shares and dilutive common stock equivalents (stock options and warrants) outstanding during the period. Diluted EPS reflects the potential dilution that could occur if stock options and warrants to purchase common stock were exercised for shares of common stock. In periods where losses are reported, the weighted-average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive. | |
Recent Accounting Pronouncements | ' |
In July 2013, the Financial Accounting Standards Board issued accounting guidance on the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The guidance states that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, which would be for our year ended December 31, 2014. This guidance should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The adoption of this guidance is not expected to have a significant impact on our consolidated financial position or results of operation. | |
Off-Balance Sheet Arrangements | ' |
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources. |
2_COSTS_ESTIMATED_EARNINGS_AND1
2. COSTS, ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Costs Estimated Earnings And Billings On Uncompleted Contracts | ' | ||||||||
COSTS, ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS | ' | ||||||||
Costs, estimated earnings and billings on uncompleted contracts are summarized below: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Costs incurred on uncompleted contracts | $ | 14,496 | $ | 9,915 | |||||
Estimated earnings on uncompleted contracts | 5,539 | 4,714 | |||||||
20,035 | 14,629 | ||||||||
Less: Billings to date on uncompleted contracts | (14,389 | ) | (12,835 | ) | |||||
$ | 5,646 | $ | 1,794 | ||||||
Included in the accompanying consolidated balance sheets under the following captions: | |||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ | 5,847 | $ | 2,547 | |||||
Billings in excess of costs and estimated earnings on uncompleted contracts | (201 | ) | (753 | ) | |||||
$ | 5,646 | $ | 1,794 |
3_INVESTMENT_IN_JOINT_VENTURE_
3. INVESTMENT IN JOINT VENTURE (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Equity Method Investments and Joint Ventures [Abstract] | ' | ||||||||
Investment in Joint Venture | ' | ||||||||
The components of our Investment in joint venture are summarized below: | |||||||||
Investment in joint venture, December 31, 2011 | $ | 1,163 | |||||||
Equity in net loss of CFT for the year ended December 31, 2012 | (179 | ) | |||||||
Investment in joint venture, December 31, 2012 | $ | 984 | |||||||
Equity in net loss of CFT for the year ended December 31, 2013 | (16 | ) | |||||||
Cash distribution from CFT for the year ended December 31, 2013 | (500 | ) | |||||||
Investment in joint venture, December 31, 2013 | $ | 468 | |||||||
Joint venture financial data | ' | ||||||||
Below is unaudited selected statement of operations data of CFT for the years ended December 31, 2013 and 2012: | |||||||||
Year Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Revenues | $ | – | $ | 2,744 | |||||
Gross profit | $ | – | $ | 518 | |||||
Net loss | $ | (80 | ) | $ | (895 | ) | |||
Below are unaudited condensed consolidated balance sheets of CFT as of December 31, 2013 and December 31, 2012: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Current assets | $ | 863 | $ | 5,749 | |||||
Property, plant and equipment, net | 1,527 | 1,675 | |||||||
Total assets | $ | 2,390 | $ | 7,424 | |||||
Current liabilities | $ | 51 | $ | 2,500 | |||||
Equity | 2,339 | 4,924 | |||||||
Total liabilities and equity | $ | 2,390 | $ | 7,424 |
4_PROPERTY_PLANT_AND_EQUIPMENT1
4. PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||||||
Net Property, plant and equipment | ' | ||||||||||||
Property, plant and equipment consisted of the following as of December 31, 2013 and 2012: | |||||||||||||
31-Dec-13 | 31-Dec-12 | Range of Asset Lives | |||||||||||
Land | $ | 1,582 | $ | 1,582 | – | ||||||||
Buildings and improvements | 1,571 | 1,555 | 7 - 36 years | ||||||||||
Leasehold improvements | 602 | 221 | 2 - 5 years | ||||||||||
Equipment | 17,840 | 14,251 | 2 - 30 years | ||||||||||
Furniture, computers and office equipment | 1,329 | 1,248 | 2 - 8 years | ||||||||||
Construction in progress | 189 | 487 | – | ||||||||||
Total property, plant and equipment | 23,113 | 19,344 | |||||||||||
Less: Accumulated depreciation and amortization | (7,718 | ) | (6,241 | ) | |||||||||
Property, plant and equipment, net | $ | 15,395 | $ | 13,103 |
5_GOODWILL_AND_OTHER_INTANGIBL1
5. GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended | ||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||||||||||||||||||||
Identifiable intangible asset schedule | ' | ||||||||||||||||||||||||||
Estimated intangible asset values, net of accumulated amortization include the following: | |||||||||||||||||||||||||||
31-Dec-13 | 31-Dec-12 | ||||||||||||||||||||||||||
Estimated | Gross Carrying | Accumulated | Net Carrying | Gross Carrying | Accumulated | Net Carrying | |||||||||||||||||||||
Useful Life | Amount | Amortization | Amount | Amount | Amortization | Amount | |||||||||||||||||||||
Patents | 17 Years | 138 | (19 | ) | 119 | 138 | (12 | ) | 126 | ||||||||||||||||||
Total | $ | 138 | $ | (19 | ) | $ | 119 | $ | 138 | $ | (12 | ) | $ | 126 |
6_LONGTERM_DEBT_Tables
6. LONG-TERM DEBT (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Long-term Debt | ' | ||||||||
Long-term debt consisted of the following: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Secured credit agreement - Whitney Bank | $ | 1,917 | $ | 2,909 | |||||
Note payable | 2,906 | – | |||||||
Capital lease obligations | 111 | 707 | |||||||
Total long-term debt | 4,934 | 3,616 | |||||||
Less: Current portion of long-term debt | (1,716 | ) | (680 | ) | |||||
Long-term debt, net of current portion | $ | 3,218 | $ | 2,936 | |||||
Maturities of long-term debt | ' | ||||||||
Maturities of long-term debt as of December 31, 2013 were as follows: | |||||||||
Debt Maturities | |||||||||
Years ending December 31,: | |||||||||
2014 | $ | 1,716 | |||||||
2015 | 1,510 | ||||||||
2016 | 111 | ||||||||
2017 | 116 | ||||||||
2018 | 1,481 | ||||||||
$ | 4,934 |
7_EARNINGS_OR_LOSS_PER_COMMON_1
7. EARNINGS OR LOSS PER COMMON SHARE (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Net loss per share: | ' | ||||||||
Reconciliation of number of shares in earnings per share calculation | ' | ||||||||
The following is a reconciliation of the number of shares used in the basic and diluted net earnings or loss per common share calculation: | |||||||||
Year Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Numerator: | |||||||||
Net loss | $ | (595 | ) | $ | (2,454 | ) | |||
Denominator: | |||||||||
Weighted average number of common shares outstanding | 11,858 | 10,185 | |||||||
Effect of dilutive securities | 2 | – | |||||||
Denominator for diluted earnings per share | 11,860 | 10,185 | |||||||
Net (loss) income per common share outstanding, basic and diluted | $ | (0.05 | ) | $ | (0.24 | ) |
8_SHAREBASED_COMPENSATION_Tabl
8. SHARE-BASED COMPENSATION (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||
Restricted stock activity | ' | ||||||||||||||
The following table summarizes the activity of our restricted stock for the years ended December 31, 2013 and 2012. The aggregate intrinsic value is based upon the closing price of $2.06 of our common stock on December 31, 2013. | |||||||||||||||
Restricted Shares | Weighted-Average Grant-Date Fair Value | Aggregate Intrinsic Value | |||||||||||||
Outstanding at December 31, 2011 | 400 | $ | 1.8 | $ | 400 | ||||||||||
Forfeited | (17 | ) | 1.8 | ||||||||||||
Vested | (8 | ) | 1.8 | ||||||||||||
Outstanding at December 31, 2012 | 375 | $ | 1.8 | $ | 488 | ||||||||||
Granted | 730 | 2.03 | |||||||||||||
Forfeited | (33 | ) | 1.8 | ||||||||||||
Vested | (17 | ) | 1.8 | ||||||||||||
Outstanding at December 31, 2013 | 1,055 | $ | 1.96 | $ | 2,173 | ||||||||||
Stock option activity | ' | ||||||||||||||
The following table summarizes our stock option activity for the years ended December 31, 2013 and 2012: | |||||||||||||||
In thousands, except per share amounts | Shares Underlying Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (in years) | ||||||||||||
Outstanding at December 31, 2011 | 1,063 | $ | 2 | 2.4 | |||||||||||
Cancellations & Forfeitures | (55 | ) | 2.19 | ||||||||||||
Outstanding at December 31, 2012 | 1,008 | $ | 2 | 2.4 | |||||||||||
Cancellations & Forfeitures | (63 | ) | 1.93 | ||||||||||||
Outstanding at December 31, 2013 | 945 | $ | 1.98 | 1.3 | |||||||||||
Exercisable at December 31, 2013 | 837 | $ | 2.01 | 1.2 | |||||||||||
Outstanding options and exercise prices | ' | ||||||||||||||
Exercise Price | Shares | ||||||||||||||
Underlying | |||||||||||||||
Options | |||||||||||||||
$1.80 | 325 | ||||||||||||||
$2.00 | 500 | ||||||||||||||
$2.40 | 120 | ||||||||||||||
945 |
9_WARRANTS_Tables
9. WARRANTS (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Warrants and Rights Note Disclosure [Abstract] | ' | ||||||||||||||||
Outstanding warrants | ' | ||||||||||||||||
The aggregate intrinsic value is based on the closing price of $2.06 on December 31, 2013. | |||||||||||||||||
Shares Underlying Warrants | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (in years) | Aggregate | ||||||||||||||
Intrinsic Value (In-The-Money) | |||||||||||||||||
Outstanding and exercisable at December 31, 2012 | 6 | $ | 20.2 | – | $ | – | |||||||||||
Outstanding and exercisable at December 31, 2013 | – | $ | – | – | $ | – |
11_INCOME_TAXES_Tables
11. INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Provision for income taxes | ' | ||||||||
The provision for income taxes is comprised of the following for the years ended December 31, 2013 and 2012. | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Federal: | |||||||||
Current | $ | -4 | $ | 15 | |||||
Deferred | (36 | ) | (520 | ) | |||||
Total | $ | (40 | ) | $ | (505 | ) | |||
State: | |||||||||
Current | $ | (14 | ) | $ | 37 | ||||
Deferred | 36 | 520 | |||||||
Total | $ | 22 | $ | 557 | |||||
Total income tax expense (benefit) | $ | (18 | ) | $ | 52 | ||||
Income tax rates | ' | ||||||||
The provision for income taxes differs from the amount computed by applying the U.S. statutory income tax rate before income taxes for the reasons set forth below for the years ended December 31, 2013 and 2012. | |||||||||
Year Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Income tax expense at federal statutory rate | 34.00% | 34.00% | |||||||
State taxes, net of federal expense | -4.32% | -21.53% | |||||||
Return to provision adjustments | 47.30% | 24.30% | |||||||
Valuation allowance | -67.93% | -36.39% | |||||||
Permanent differences | -6.03% | -2.57% | |||||||
Total effective rate | 3.02% | -2.19% | |||||||
Deferred tax assets | ' | ||||||||
The tax effects of the temporary differences and carry forwards are as follow at December 31, 2013 and 2012: | |||||||||
Year Ended | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Deferred tax assets: | |||||||||
Allowance for doubtful accounts | $ | 198 | $ | 353 | |||||
Net operating loss | 5,258 | 4,249 | |||||||
Share-based compensation | 1,140 | 990 | |||||||
Investment in joint venture | 4,599 | 4,700 | |||||||
Other | 90 | 122 | |||||||
Total deferred tax assets | $ | 11,285 | $ | 10,414 | |||||
Deferred tax liabilities: | |||||||||
Depreciation and amortization on property, plant and equipment | $ | (2,797 | ) | $ | (2,360 | ) | |||
Amortization of intangibles | (59 | ) | (41 | ) | |||||
Total deferred tax liabilities | $ | (2,856 | ) | $ | (2,401 | ) | |||
Less: valuation allowance | (8,429 | ) | (8,013 | ) | |||||
Net deferred tax position | $ | – | $ | – |
12_COMMITMENTS_AND_CONTINGENCI1
12. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||
Future minimum contractual lease obligations | ' | ||||||||
At December 31, 2013, future minimum contractual lease obligations were as follows: | |||||||||
Years ending December 31,: | Capital Leases | Operating Leases | |||||||
2014 | $ | 63 | $ | 1,346 | |||||
2015 | 58 | 1,348 | |||||||
2016 | – | 1,246 | |||||||
2017 | – | 1,080 | |||||||
2018 | – | 1,080 | |||||||
Thereafter | – | 4,770 | |||||||
Total minimum lease payments | $ | 121 | $ | 10,870 | |||||
Residual principal balance | – | ||||||||
Amount representing interest | (10 | ) | |||||||
Present value of minimum lease payments | $ | 111 | |||||||
Less current maturities of capital lease obligations | (55 | ) | |||||||
Long-term contractual obligations | $ | 56 | |||||||
Letters of credit outstanding | ' | ||||||||
Letters of credit outstanding at December 31, 2013 and 2012 under the Fifth Amendment with Whitney are as follows: | |||||||||
Type | 31-Dec-13 | 31-Dec-12 | |||||||
Performance | $ | – | $ | 235 | |||||
Warranty | 415 | 592 | |||||||
Total | $ | 415 | $ | 827 | |||||
1_DESCRIPTION_OF_BUSINESS_Deta
1. DESCRIPTION OF BUSINESS (Details Narrative) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Allowance for doubtful accounts | $1,006 | $1,211 |
Bad debt expense | $61 | $1,134 |
Sales [Member] | Customer 1 | ' | ' |
Concentration risk percentage | 38.00% | 30.00% |
Sales [Member] | Customer 2 | ' | ' |
Concentration risk percentage | 13.00% | 15.00% |
Sales [Member] | Customer 3 | ' | ' |
Concentration risk percentage | 11.00% | 6.00% |
Sales [Member] | Customer 4 | ' | ' |
Concentration risk percentage | 8.00% | 5.00% |
Sales [Member] | Customer 5 | ' | ' |
Concentration risk percentage | 7.00% | ' |
Accounts Receivable [Member] | Customer 1 | ' | ' |
Concentration risk percentage | 31.00% | 53.00% |
Accounts Receivable [Member] | Customer 2 | ' | ' |
Concentration risk percentage | 14.00% | 7.00% |
Accounts Receivable [Member] | Customer 3 | ' | ' |
Concentration risk percentage | 14.00% | 7.00% |
Accounts Receivable [Member] | Customer 4 | ' | ' |
Concentration risk percentage | 12.00% | 6.00% |
Accounts Receivable [Member] | Customer 5 | ' | ' |
Concentration risk percentage | 9.00% | 5.00% |
2_BILLINGS_COSTS_AND_ESTIMATED
2. BILLINGS, COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Billings In Excess Of Costs And Estimated Earnings On Uncompleted Contracts And Deferred Revenues | ' | ' |
Costs incurred on uncompleted contracts | $14,496 | $9,915 |
Estimated earnings on uncompleted contracts | 5,539 | 4,714 |
Gross costs and estimated earnings | 20,035 | 14,629 |
Less: Billings to date on uncompleted contracts | -14,389 | -12,835 |
Costs incurred plus estimated earning less billings on uncompleted contracts | 5,646 | 1,794 |
Included in the accompanying condensed consolidated balance sheets under the following captions: | ' | ' |
Costs and estimated earnings in excess of billings on uncompleted contracts | 5,847 | 2,547 |
Billings in excess of costs and estimated earnings on uncompleted contracts | -201 | -753 |
Total costs and estimated earnings and billings in excess of cost on uncompleted contracts | $5,646 | $1,794 |
3_INVESTMENT_IN_JOINT_VENTURE_1
3. INVESTMENT IN JOINT VENTURE (Details-Investment in joint ventures) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Equity Method Investments and Joint Ventures [Abstract] | ' | ' |
Investment in joint venture - beginning balance | $984 | $1,163 |
Equity in net loss of joint venture | -16 | -179 |
Cash distribution from joint venture | 500 | ' |
Investment in joint venture - ending balance | $468 | $984 |
3_INVESTMENT_IN_JOINT_VENTURE_2
3. INVESTMENT IN JOINT VENTURE (Details-Statement of operations) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Equity Method Investments and Joint Ventures [Abstract] | ' | ' |
Revenues | $0 | $2,744 |
Gross profit | 0 | 518 |
Net (loss) income | -80 | -895 |
Current assets | 863 | 5,749 |
Property, plant and equipment, net | 1,527 | 1,675 |
Total assets | 2,390 | 7,424 |
Current liabilities | 51 | 2,500 |
Equity | 2,339 | 4,924 |
Total liabilities and equity | $2,390 | $7,424 |
4_PROPERTY_PLANT_AND_EQUIPMENT2
4. PROPERTY, PLANT AND EQUIPMENT (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | Building and improvements | Leasehold Improvements | Equipment | Furniture, computers and office equipment | ||
Property Plant And Equipment | ' | ' | ' | ' | ' | ' |
Land | $1,582 | $1,582 | ' | ' | ' | ' |
Buildings and improvements | 1,571 | 1,555 | ' | ' | ' | ' |
Leasehold improvements | 602 | 221 | ' | ' | ' | ' |
Equipment | 17,840 | 14,251 | ' | ' | ' | ' |
Furniture, computers and office equipment | 1,329 | 1,248 | ' | ' | ' | ' |
Construction in progress | 189 | 487 | ' | ' | ' | ' |
Total property, plant and equipment | 23,113 | 19,344 | ' | ' | ' | ' |
Less: Accumulated depreciation and amortization | -7,718 | -6,241 | ' | ' | ' | ' |
Property, plant and equipment, net | $15,395 | $13,103 | ' | ' | ' | ' |
Range of Asset Lives | ' | ' | '7 to 36 years | '2 to 5 years | '2 to 30 years | '2 to 8 years |
4_PROPERTY_PLANT_AND_EQUIPMENT3
4. PROPERTY, PLANT AND EQUIPMENT (Details Narrative) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Property, Plant and Equipment [Abstract] | ' | ' |
Assets under capital lease | $253 | $1,493 |
Amortization of assets under capital lease | 55 | 133 |
Depreciation expense excluded from cost of sales | 139 | 140 |
Depreciation expense included in cost of sales | $1,425 | $1,317 |
5_GOODWILL_AND_OTHER_INTANGIBL2
5. GOODWILL AND OTHER INTANGIBLE ASSETS (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Gross Carrying Amount | ' | $138 |
Accumulated Amortization | ' | -12 |
Intangibles, net | 119 | 126 |
Patents | ' | ' |
Gross Carrying Amount | 138 | 138 |
Accumulated Amortization | -19 | -12 |
Intangibles, net | $119 | $126 |
Estimated Useful Life | '17 years | ' |
6_LONGTERM_DEBT_DetailsLong_te
6. LONG-TERM DEBT (Details-Long term debt) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Debt Disclosure [Abstract] | ' | ' |
Secured credit agreement - Whitney Bank | $1,917 | $2,909 |
Note payable | 2,906 | 0 |
Capital lease obligations | 111 | 707 |
Total long-term debt | 4,934 | 3,616 |
Less: Current portion of long-term debt | -1,716 | -680 |
Long-term debt, net of current portion | $3,218 | $2,936 |
6_LONGTERM_DEBT_DetailsDebt_Ma
6. LONG-TERM DEBT (Details-Debt Maturities) (USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Debt Disclosure [Abstract] | ' |
2014 | $1,716 |
2015 | 1,510 |
2016 | 111 |
2017 | 116 |
2018 | 1,481 |
Long Term Debt | $4,934 |
6_LONGTERM_DEBT_Details_Narrat
6. LONG-TERM DEBT (Details Narrative) (Whitney Credit Agreement, USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Whitney Credit Agreement | ' |
Other debt | $2,906 |
7_EARNINGS_OR_LOSS_PER_COMMON_2
7. EARNINGS OR LOSS PER COMMON SHARE (Details) (USD $) | 12 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Net loss per share: | ' | ' |
Net (loss) income | ($595) | ($2,454) |
Denominator: | ' | ' |
Weighted average number of common shares outstanding | 11,858 | 10,185 |
Effect of dilutive securities | 2 | 0 |
Denominator for diluted earnings per share | 11,860 | 10,185 |
Net (loss) income per common share outstanding, basic and diluted | ($0.05) | ($0.24) |
7_EARNINGS_PER_COMMON_SHARE_De
7. EARNINGS PER COMMON SHARE (Details Narrative) | Dec. 31, 2013 | Dec. 31, 2012 |
Net loss per share: | ' | ' |
Warrants convertible to common stock | 0 | 6,000 |
Options convertible to common stock | 945,000 | 1,008,000 |
8_SHAREBASED_COMPENSATION_Deta
8. SHARE-BASED COMPENSATION (Details-Activity) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Aggregate Intrinsic Value | ' | ' |
Outstanding, ending balance | ' | ' |
Restricted Stock | ' | ' |
Restricted Shares | ' | ' |
Outstanding, beginning balance | 400,000 | ' |
Granted | 730,000 | ' |
Forfeited | -33,000 | -17,000 |
Vested | -17,000 | -8,000 |
Outstanding, ending balance | 1,055,000 | 400,000 |
Weighted Average Grant-Date Fair Value | ' | ' |
Outstanding, beginning balance | $1.80 | $1.80 |
Forfeited | $2.03 | $1.80 |
Vested | $1.80 | $1.80 |
Granted | $1.80 | ' |
Outstanding, ending balance | $1.96 | $1.80 |
Aggregate Intrinsic Value | ' | ' |
Outstanding, beginning balance | $488,000 | $400,000 |
Outstanding, ending balance | $2,173,000 | $488,000 |
Warrants | ' | ' |
Restricted Shares | ' | ' |
Outstanding, ending balance | ' | 6,000 |
Weighted Average Grant-Date Fair Value | ' | ' |
Outstanding, ending balance | ' | $20.20 |
8_SHAREBASED_COMPENSATION_Deta1
8. SHARE-BASED COMPENSATION (Details-Stock Option Activity) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Shares Underlying Options | ' | ' |
Outstanding, ending balance | 945,000 | ' |
Stock Options | ' | ' |
Shares Underlying Options | ' | ' |
Outstanding, beginning balance | 1,008,000 | 1,063,000 |
Cancellations and Forfeitures | -63,000 | -55,000 |
Outstanding, ending balance | 945,000 | 1,008,000 |
Exercisable, ending balance | 837,000 | 753,000 |
Weighted-Average Exercise Price | ' | ' |
Outstanding, beginning balance | $1.98 | ' |
Cancellations and Forfeitures | $1.93 | $2.19 |
Outstanding, ending balance | $1.98 | $1.98 |
Exercisable, ending balance | $2.01 | $2.04 |
Weighted-Average Remaining Contractual Term (in years) | ' | ' |
Outstanding, ending balance | '1 year 3 months 18 days | '2 years 4 months 24 days |
Exercisable, ending balance | '1 year 2 months 12 days | ' |
8_SHAREBASED_COMPENSATION_Deta2
8. SHARE-BASED COMPENSATION (Details-Exercise prices) | Dec. 31, 2013 |
Shares Underlying Options | 945,000 |
Exercise Price $1.80 | ' |
Shares Underlying Options | 325,000 |
Exercise Price $2.00 | ' |
Shares Underlying Options | 500,000 |
Exercise Price $2.40 | ' |
Shares Underlying Options | 120,000 |
8_SHAREBASED_COMPENSATION_Deta3
8. SHARE-BASED COMPENSATION (Details Narrative) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Stock Options | ' | ' |
Share-based compensation | $150 | $341 |
Unamortized estimated fair value of stock award | 44 | ' |
Aggregate intrinsic value stock options | 76 | ' |
Fair value of options vested | 42 | ' |
Restricted Stock Awards | ' | ' |
Share-based compensation | 460 | 213 |
Unamortized estimated fair value of stock award | $980 | ' |
9_WARRANTS_Details
9. WARRANTS (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Weighted-average remaining contractural term | '0 years | '0 years |
Aggregate intrinsic value | ' | ' |
Warrants | ' | ' |
Shares underling warrants outstanding and exercisable | ' | 6,000 |
Weighted-average exercise price | ' | $20.20 |
11_INCOME_TAXES_DetailsProvisi
11. INCOME TAXES (Details-Provision for income taxes) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Federal: | ' | ' |
Current | ($4) | $15 |
Deferred | -36 | -520 |
Total | -40 | -505 |
State: | ' | ' |
Current | -14 | 37 |
Deferred | 36 | 520 |
Total | 22 | 557 |
Total income tax expense (benefit) | ($18) | $52 |
11_INCOME_TAXES_DetailsTax_rat
11. INCOME TAXES (Details-Tax rate) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' |
Income tax expense at federal statutory rate | 34.00% | 34.00% |
State taxes, net of federal expense | -4.32% | -21.53% |
Return to provision adjustments | -47.30% | 24.30% |
Valuation allowance | -67.93% | -36.39% |
Permanent differences | -6.03% | -2.57% |
Total effective rate | 3.02% | -2.19% |
11_INCOME_TAXES_DetailsDeferre
11. INCOME TAXES (Details-Deferred taxes) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Deferred tax assets: | ' | ' |
Allowance for doubtful accounts | $198 | $353 |
Net operating loss | 5,258 | 4,249 |
Share-based compensation | 1,140 | 990 |
Investment in joint venture | 4,599 | 4,700 |
Other | 90 | 122 |
Total deferred tax assets | 11,285 | 10,414 |
Deferred tax liabilities: | ' | ' |
Depreciation and amortization on property, plant and equipment | -2,797 | -2,360 |
Amortization of intangibles | -59 | -41 |
Total deferred tax liabilities | -2,856 | -2,401 |
Less: valuation allowance | ($8,429) | ($8,013) |
11_INCOME_TAXES_Details_Narrat
11. INCOME TAXES (Details Narrative) (USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2013 |
Income Tax Disclosure [Abstract] | ' |
Net operating loss carryforward | $15,444 |
Operating loss expiration date | 31-Dec-28 |
12_COMMITMENTS_AND_CONTINGENCI2
12. COMMITMENTS AND CONTINGENCIES (Details-Lease obligations) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
2014 | $63 | ' |
2015 | 58 | ' |
2016 | 0 | ' |
2017 | 0 | ' |
2018 | 0 | ' |
Thereafter | 0 | ' |
Total minimum lease payments | 121 | ' |
Residual principal balance | 0 | ' |
Amount representing interest | -10 | ' |
Present value of minimum lease payments | 111 | 707 |
Less current maturities of capital lease obligations | -55 | ' |
Long-term contractual obligations | 56 | ' |
2014 | 1,346 | ' |
2015 | 1,348 | ' |
2016 | 1,246 | ' |
2017 | 1,080 | ' |
2018 | 1,080 | ' |
Thereafter | 4,770 | ' |
Total minimum lease payments | $10,870 | ' |
12_COMMITMENTS_AND_CONTINGENCI3
12. COMMITMENTS AND CONTINGENCIES (Details-Letters of credit) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Other Liabilities Unclassified | ' | ' |
Letters Of Credit Outstanding | $415 | $827 |
Performance-Related Letter of Credit | ' | ' |
Other Liabilities Unclassified | ' | ' |
Letters Of Credit Outstanding | 0 | 235 |
Warranty-Related Letter of Credit | ' | ' |
Other Liabilities Unclassified | ' | ' |
Letters Of Credit Outstanding | $415 | $592 |
12_COMMITMENTS_AND_CONTINGENCI4
12. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Rent expense | $1,007 | $498 |