Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Mar. 28, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 0-30351 | ||
Entity Registrant Name | DEEP DOWN, INC. | ||
Entity Central Index Key | 0001110607 | ||
Entity Tax Identification Number | 75-2263732 | ||
Entity Incorporation, State or Country Code | NV | ||
Entity Address, Address Line One | 18511 Beaumont Highway | ||
Entity Address, City or Town | Houston | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 77049 | ||
City Area Code | (281) | ||
Local Phone Number | 517-5000 | ||
Title of 12(g) Security | Common Stock, $0.001 par value | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 8,672,205 | ||
Entity Common Stock, Shares Outstanding | 12,035,261 | ||
Auditor Name | Moss Adams, LLP | ||
Auditor Location | Houston, Texas | ||
Auditor Firm ID | 659 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 3,676 | $ 3,745 |
Accounts receivable | 5,929 | 4,650 |
Employee retention tax credit receivable | 650 | 0 |
Inventory | 254 | 187 |
Contract assets | 352 | 189 |
Prepaid expenses and other current assets | 103 | 151 |
Total current assets | 10,964 | 8,922 |
Property, plant and equipment, net | 1,727 | 2,604 |
Intangibles, net | 38 | 44 |
Right-of-use operating lease assets | 1,861 | 3,174 |
Other assets | 136 | 195 |
Total assets | 14,726 | 14,939 |
Current liabilities: | ||
Accounts payable and accrued expenses | 2,310 | 1,988 |
Contract liabilities | 250 | 730 |
Current portion of PPP loan payable | 0 | 863 |
Current lease liabilities | 1,306 | 1,261 |
Total current liabilities | 3,866 | 4,842 |
PPP loan payable | 0 | 248 |
Operating lease liability, long-term | 588 | 1,951 |
Total liabilities | 4,454 | 7,041 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity: | ||
Common stock, 24,500,000 shares authorized at $0.001 par value, 15,906,010 issued at December 31, 2021 and December 31, 2020 | 16 | 16 |
Additional paid-in capital | 73,686 | 73,638 |
Treasury stock, 3,517,145 shares, at cost | (2,809) | (2,809) |
Accumulated deficit | (60,621) | (62,947) |
Total stockholders' equity | 10,272 | 7,898 |
Total liabilities and stockholders' equity | $ 14,726 | $ 14,939 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common Stock, Shares Authorized | 24,500,000 | 24,500,000 |
Common stock par value | $ 0.001 | $ 0.001 |
Common Stock, Shares, Issued | 15,906,010 | 15,906,010 |
Treasury stock shares | 3,517,145 | 3,517,145 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | ||
Revenues | $ 17,233 | $ 12,977 |
Cost of sales: | ||
Cost of sales | 10,733 | 7,232 |
Depreciation expense | 663 | 830 |
Total cost of sales | 11,396 | 8,062 |
Gross profit | 5,837 | 4,915 |
Operating expenses: | ||
Selling, general and administrative | 5,892 | 6,210 |
Depreciation and amortization | 288 | 252 |
Asset impairment | 0 | 4,490 |
Total operating expenses | 6,180 | 10,952 |
Operating loss | (343) | (6,037) |
Other (income) expense: | ||
Interest expense, net | 12 | 7 |
Other income, net | (2,869) | 0 |
Loss on sale of property, plant and equipment | 76 | 0 |
Total other (income) expense | (2,781) | 7 |
Income (loss) before income tax expense | 2,438 | (6,044) |
Income tax expense | 112 | 13 |
Net income (loss) | $ 2,326 | $ (6,057) |
Net income (loss) per share: | ||
Basic | $ 0.19 | $ (0.48) |
Fully diluted | $ 0.19 | $ (0.48) |
Weighted-average shares outstanding: | ||
Basic | 12,389 | 12,495 |
Fully diluted | 12,454 | 12,495 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 16 | $ 73,521 | $ (2,284) | $ (56,890) | $ 14,363 |
Balance at beginning, shares at Dec. 31, 2019 | 15,906 | ||||
Net income | (6,057) | (6,057) | |||
Treasury shares purchased | (525) | (525) | |||
Share-based compensation | 117 | 117 | |||
Ending balance, value at Dec. 31, 2020 | $ 16 | 73,638 | (2,809) | (62,947) | 7,898 |
Balance at ending shares at Dec. 31, 2020 | 15,906 | ||||
Net income | 2,326 | 2,326 | |||
Share-based compensation | 48 | 48 | |||
Ending balance, value at Dec. 31, 2021 | $ 16 | $ 73,686 | $ (2,809) | $ (60,621) | $ 10,272 |
Balance at ending shares at Dec. 31, 2021 | 15,906 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 2,326 | $ (6,057) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Share-based compensation | 48 | 117 |
Depreciation and amortization | 951 | 1,082 |
Loss on sale of property, plant and equipment | 76 | 0 |
Bad debt expense | 442 | 238 |
Non-cash lease (benefit) expense | (4) | 10 |
Forgiveness of PPP loan | (2,222) | 0 |
Loss on asset impairment | 0 | 4,490 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (1,721) | (433) |
Employee retention tax credit receivable | (650) | 0 |
Contract assets | (163) | 625 |
Inventories | (67) | (187) |
Prepaid expenses and other current assets | 33 | (8) |
Other assets | 41 | 26 |
Accounts payable and accrued expenses | 322 | (216) |
Contract liabilities | (479) | 107 |
Net cash used in operating activities | (1,067) | (206) |
Cash flows from investing activities: | ||
Proceeds from sale of property, plant and equipment | 229 | 0 |
Purchases of property, plant and equipment | (355) | (171) |
Payments received on note receivable | 13 | 13 |
Net cash used in investing activities | (113) | (158) |
Cash flows from financing activities: | ||
Proceeds from PPP loan | 1,111 | 1,111 |
Repurchase of common shares | 0 | (525) |
Net cash provided by financing activities | 1,111 | 586 |
Change in cash | (69) | 222 |
Cash, beginning of year | 3,745 | 3,523 |
Cash, end of year | $ 3,676 | $ 3,745 |
DESCRIPTION OF BUSINESS AND SUM
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES | NOTE 1: DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES Description of Business Deep Down, Inc., a Nevada corporation (“Deep Down Nevada”), and its direct wholly owned subsidiary, Deep Down, Inc., a Delaware corporation (“Deep Down Delaware”, and together with Deep Down Nevada, “Deep Down”, “we”, “us” or the “Company”), is an energy services company that provides equipment and support services to the world’s energy and offshore industries. Deep Down provides innovative solutions to complex customer challenges presented between the production facility and the energy source. Deep Down's core services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, and related services. Additionally, Deep Down's team can support subsea engineering, manufacturing, installation, commissioning, and maintenance projects located anywhere in the world. Liquidity Deep Down’s cash on hand was $ 3,676 7,098 3,745 4,080 The Company believes it will have adequate liquidity to meet its future operating requirements through a combination of cash on hand, cash expected to be generated from operations, potential sales of PP&E, disciplined capital investments, and securing a credit facility. However, given the volatility in oil prices and the impact on global economic activity caused by the COVID-19 pandemic, as well as recent increases in raw materials costs and ongoing supply chain constraints, the Company cannot predict this with certainty. To mitigate this uncertainty and preserve liquidity, the Company will continue to pursue opportunistic cost containment initiatives, which can include workforce alignment and limiting overhead spending and research and development efforts to only critical items. Summary of Significant Accounting Policies and Estimates Principles of Consolidation The consolidated financial statements include the accounts of Deep Down and its wholly owned subsidiary for the years ended December 31, 2021 and 2020. All intercompany transactions and balances have been eliminated. Use of Estimates The preparation of these financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) requires us to make estimates and judgments that may affect assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition and related allowances, contract assets and liabilities, impairments of long-lived assets, income taxes including the valuation allowance for deferred tax assets, contingencies and litigation, and share-based payments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Segments For the years ended December 31, 2021 and 2020, the Company’s operations were organized as one reportable segment. 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 which, 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, accounts receivables and payables, and notes receivable (included in other assets). The carrying values of cash, accounts receivables, and payables approximated their fair values at December 31, 2021 and 2020 due to their short-term maturities. The carrying values of our notes receivable approximate their fair values at December 31, 2021 and 2020 because the interest rates approximate current market rates. Accounts Receivable Accounts receivable are uncollateralized customer obligations due under normal trade terms. The Company provides an allowance on accounts receivables based on a specific review of each customer’s accounts receivable balance with respect to its ability to make payments. Generally, the Company does not charge interest on past due accounts. When specific accounts are determined to require an allowance, they are expensed by a provision for bad debts in that period. At December 31, 2021 and 2020, the Company estimated the allowance for doubtful accounts requirement to be $ 525 84 442 238 Concentration of Revenues and Credit Risk Deep Down’s revenues are derived from the sale of products and services to customers who participate in the offshore sector of the energy industry. Customers may be similarly affected by economic and other changes in the energy industry. For the year ended December 31, 2021, our five largest customers accounted for 44 13 11 6 6 43 10 8 8 5 As of December 31, 2021, three of our customers accounted for 34 29 10 52 12 9 Property, plant and equipment PP&E is stated at cost, net of accumulated depreciation, amortization, and related impairments. Depreciation and amortization are 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 finance 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 consolidated statements of operations. If circumstances associated with our PP&E have changed or a significant event has occurred that may affect the recoverability of the carrying amount of our PP&E, an impairment indicator exists, and we test the PP&E for impairment. Before testing for impairment, we group PP&E with other finite-lived long-lived assets (“long-lived assets”) at the lowest level of identifiable cash flows that are largely independent of cash flows from other assets or groups of assets. Testing long-lived assets for impairment is a two-step process: Step 1 - We test the long-lived asset group for recoverability by comparing the carrying amount of the asset group with the sum of the undiscounted future cash flows from use and the eventual disposal of the asset group. If the carrying amount of the long-lived asset group is determined to be greater than the sum of the undiscounted future cash flows from use and disposal, we would need to perform step 2. Step 2 - If the long-lived group of assets fails the recoverability test in step 1, we would record an impairment expense for the difference between the carrying amount and the fair value of the long-lived asset group. During the year ended December 31, 2021, the Company conducted assessments of whether impairment indicators were present that indicate the carrying amount of its long-lived asset (group) might not be recoverable and determined that no such events or changes in circumstances were present. During the year ended December 31, 2020, the Company recorded a charge of $ 4,490 The valuation of impaired equipment is a Level 3 non-recurring fair value measurement. Impaired assets discussed above were written down to zero value. Lease Obligations At the inception of a lease, Deep Down evaluates the agreement to determine whether the lease will be accounted for as an operating or finance 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 if the contract contains a substantial penalty for failure to renew or extend the lease, it could lead the lessee to conclude it has a significant economic incentive to extend the lease beyond the base rental period. Deep Down leases land, buildings, vehicles, and certain equipment under non-cancellable operating leases. The Company leases office, indoor manufacturing, warehouse, and operating space in Houston, Texas and leases storage space in Mobile, Alabama to house its 3,400 metric ton and 3,500 metric ton carousel systems. Lease Concessions As it relates to lease concessions related to its leases affected by economic disruption caused by the COVID-19 pandemic, the Company elected to account for the deferred payments as variable lease payments. As such, the Company recorded a reduction to rent expense in the period of the deferral. When the Company later incurs the deferred rent, it will recognize it as variable rent expense. Income Taxes We follow the asset and liability method of accounting for income taxes. This method considers 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 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, 2021, the Company’s shared-based compensation was in the form of stock options. At December 31, 2020, the Company had two types of share-based compensation: stock options and restricted stock. See further discussion in Note 6. 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) 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. Recently Issued Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12 “Income Taxes (Topic 740).” Topic 740 is effective for fiscal years and interim periods beginning after December 15, 2020. This update simplifies the accounting for income taxes by removing certain exceptions such as the exception to the incremental approach for intra-period tax allocation, the exception to the requirement to recognize a deferred tax liability for equity method investments, the exception to the ability not to recognize a deferred tax liability for a foreign subsidiary and the exception to the general methodology for calculating income taxes in an interim period. The adoption of ASU No. 2019-12 did not have a material impact on our financial statements and disclosures. In November 2019, the FASB issued ASU No. 2019-10 “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates.” The FASB issued this update to extend and simplify how effective dates are staggered between larger public companies and all other entities for the aforementioned major updates. Topic 326 is effective for fiscal years and interim periods beginning after December 15, 2022 for smaller reporting companies. We are currently evaluating the impact of these updates on our financial statements and related disclosures, but at this time, we do not expect a material impact on our financial statements and disclosures. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2021 | |
Leases | |
LEASES | NOTE 2: LEASES In February 2016, the FASB issued ASU 2016-02, Leases (“ASC Topic 842”). Under this guidance, lessees are required to recognize on the balance sheet a lease liability and a right-of-use (“ROU”) asset for all leases, except for short-term leases with terms of twelve months or less. The lease liability represents the lessee’s obligation to make lease payments arising from a lease and will initially be measured as the present value of the lease payments. The ROU asset represents the lessee’s right to use a specified asset for the lease term, and will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial direct costs. ASC Topic 842 provides for certain practical expedients when adopting the guidance. The Company elected the package of practical expedients allowing the Company, for all leases that commenced prior to the adoption date, to not reassess whether any expired or existing contracts are, or contain, leases, the lease classification for any expired or existing leases, or initial direct costs for any expired or existing leases. The Company utilizes the land easements practical expedient allowing the Company to not assess whether any expired or existing land easements are, or contain, leases if they were not previously accounted for as leases under the existing leasing guidance. Instead, the Company will continue to apply its existing accounting policies to historical land easements. The Company elects to apply the short-term lease exception; therefore, the Company will not record an ROU asset or corresponding lease liability for leases with an initial term of twelve months or less that are not reasonably certain of being renewed and instead will recognize a single lease cost allocated over the lease term, generally on a straight-line basis. The Company elects to apply the practical expedient to not separate lease components from non-lease components and instead account for both as a single lease component for all asset classes. The Company elects to not capitalize any lease in which the estimated value of the underlying asset at the commencement date is less than the Company’s capitalization threshold. A lease would need to qualify for the low value exception based on various criteria. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. The present value of lease payments is determined primarily using the incremental borrowing rate based on the information available at the lease commencement date. Lease agreements with lease and non-lease components are generally accounted for as a single lease component. The Company’s operating lease expense is recognized on a straight-line basis over the lease term and a portion is recorded in cost of sales, and the remainder is recorded in selling, general and administrative expenses. The accounting for some leases may require significant judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rate to utilize in our net present value calculation of lease payments for lease agreements which do not provide an implicit rate, and assessing the likelihood of renewal or termination options. As of December 31, 2021 and 2020, the Company does not have any finance lease assets or liabilities, nor does the Company have any subleases. The following tables present information about our operating leases: Operating lease assets and liabilities December 31, 2021 December 31, 2020 Assets: Right-of-use assets $ 1,861 $ 3,174 Liabilities: Current lease liabilities 1,306 1,261 Non-current lease liabilities 588 1,951 Total lease liabilities $ 1,894 $ 3,212 The components of our lease expense were as follows: Components of lease expense Year Ended December 31, 2021 2020 Operating lease expense included in Cost of sales $ 1,259 $ 977 Operating lease expense included in SG&A 169 139 Short term lease expense 309 194 Total lease expense $ 1,737 $ 1,310 December 31, 2021 December 31, 2020 Weighted-average remaining lease terms on operating leases (yrs.) 1.43 2.43 Weighted-average discount rates on operating leases 5.374 5.374 For the year ended December 31, 2021, the Company did not have any sale/leaseback transactions. Present value of lease liabilities: Future minimum lease payments Years ending December 31, Operating Leases 2022 $ 1,371 2023 582 2024 8 2025 5 Total lease payments $ 1,966 Less: Interest (72 ) Present value of lease liabilities $ 1,894 |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE FROM CONTRACTS WITH CUSTOMERS | NOTE 3: REVENUE FROM CONTRACTS WITH CUSTOMERS Revenues are recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. To determine the proper revenue recognition method for our customer contracts, we evaluate whether two or more contracts should be combined and accounted for as one single contract and whether the combined or single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate the combined or single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. For most of our fixed price contracts, the customer contracts with us to provide a significant service of integrating a complex set of tasks and components into a single project or capability even if that single project results in the delivery of multiple units. Hence, the entire contract is accounted for as one performance obligation. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Disaggregation of Revenue The following table presents our revenues disaggregated by fixed price and service contracts. Sales taxes are excluded from revenues. Disaggregation of Revenues Year Ended December 31, 2021 2020 Fixed Price Contracts $ 6,867 $ 8,664 Service Contracts 10,366 4,313 Total $ 17,233 $ 12,977 Fixed price contracts For fixed price contracts, we generally recognize revenue over time as we perform because of continuous transfer of control to the customer. This continuous transfer of control to the customer is supported by clauses in the contract that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work in process. In our fixed price contracts, the customer either controls the work in process or we deliver products with no alternative use to the Company and have rights to payment for work performed to date plus a reasonable profit as evidenced by contractual termination clauses. Because of control transferring over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We generally use the cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price, and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. We have a company-wide standard and disciplined quarterly estimate at completion process in which management reviews the progress and execution of our performance obligations. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. Changes in estimates of net sales, cost of sales and the related impact to operating income are recognized quarterly on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation’s percentage of completion. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. When estimates of total costs to be incurred exceed total estimates of revenue to be earned on a performance obligation related to fixed price contracts, a provision for the entire loss on the performance obligation is recognized in the period the loss is estimated. Service Contracts We recognize revenue for service contracts measuring progress toward satisfying the performance obligation in a manner that best depicts the transfer of goods or services to the customer. The control over services is transferred over time when the services are rendered to the customer on a daily basis. Specifically, we recognize revenue as the services are provided as we have the right to invoice the customer for the services performed. Services are billed and paid on a monthly basis. Payment terms for services are usually 30 days from invoice receipt but have increased to 45 or 60 days depending on the customer. Contract balances Costs and estimated earnings in excess of billings on uncompleted contracts arise when revenues are recorded based on the extent of progress towards completion 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 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. For the years ending 2021 and 2020, there were no contracts with terms that extended beyond one year. The following table summarizes our contract assets, which are “Costs and estimated earnings in excess of billings on uncompleted contracts” and our contract liabilities, which are “Billings in excess of costs and estimated earnings on uncompleted contracts”. Schedule of earnings in excess of billings on uncompleted contracts December 31, 2021 December 31, 2020 Costs incurred on uncompleted contracts $ 1,312 $ 2,098 Estimated earnings on uncompleted contracts 1,485 3,153 Gross costs and estimated earnings 2,797 5,251 Less: Billings to date on uncompleted contracts (2,695 ) (5,792 ) Costs incurred plus estimated earning less billings on uncompleted contracts, net $ 102 $ (541 ) Included in the accompanying consolidated balance sheets under the following captions: Contract assets $ 352 $ 189 Contract liabilities (250 ) (730 ) Costs incurred plus estimated earning less billings on uncompleted contract $ 102 $ (541 ) The contract asset and liability balances at December 31, 2021 and 2020 consisted primarily of revenue related to fixed-price projects. Remaining Performance Obligations Remaining performance obligations represent the transaction price of firm orders for which work has not been performed and excludes unexercised contract options, potential orders, and any remaining performance obligations for any sales arrangements that had not fully satisfied the criteria to be considered a contract with a customer pursuant to the requirements of ASC 606. Practical Expedients and Exemptions We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling, general and administrative expenses. Many of our services contracts are short-term in nature with a contract term of one year or less. For those contracts, we have utilized the practical expedient in ASC 606-10-50-14 exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. Additionally, our payment terms are short-term in nature with settlements of one year or less. We have, therefore, utilized the practical expedient in ASC 606-10-32-18 exempting the Company from adjusting the promised amount of consideration for the effects of a significant financing component given that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Further, in many of our service contracts, we have a right to consideration from a customer in an amount that corresponds directly with the value to the customer of our performance completed to date (for example, a service contract in which we bill a fixed amount for each hour of service provided). For those contracts, we have utilized the practical expedient in ASC 606-10-55-18, which allows us to recognize revenue in the amount for which we have the right to invoice. Accordingly, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | NOTE 4: PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following: Net Property, plant and equipment Range of December 31, 2021 December 31, 2020 Asset Lives Buildings and improvements $ 285 $ 285 7 - 36 years Leasehold improvements 899 906 2 - 5 years Equipment 11,885 12,343 2 - 30 years Furniture, computers and office equipment 429 907 2 - 8 years Construction in progress 60 84 – Total property, plant and equipment 13,558 14,525 Less: Accumulated depreciation and amortization (11,831 ) (11,921 ) Property, plant and equipment, net $ 1,727 $ 2,604 Depreciation expense included in cost of sales in the accompanying consolidated statements of operations was $ 663 830 288 252 Construction in progress represents assets that are not ready for service or are in the construction stage. Assets are depreciated once they are placed in service. See discussion in Note 1 for any impairment charges related to these assets. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2021 | |
Net income (loss) per share: | |
EARNINGS PER COMMON SHARE | NOTE 5: EARNINGS PER COMMON SHARE Basic earnings per share (“EPS”) is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding for the period. Diluted EPS is calculated by dividing net income (loss) by the weighted-average number of common shares and the dilutive effect of common stock equivalents (warrants, nonvested stock awards and stock options) using the treasury method. In each relevant period, the net income used in the basic and diluted EPS calculations is the same. The following table reconciles the weighted-average basic number of common shares outstanding and the weighted-average diluted number of common shares deemed outstanding for the purpose of calculating basic and diluted EPS. Reconciliation of number of shares in earnings per share calculation Year Ended December 31, 2021 2020 Numerator: Net income (loss) $ 2,326 $ (6,057 ) Denominator: Weighted average number of common shares outstanding: Basic 12,389 12,495 Diluted 12,454 12,495 Earnings (loss) per common share outstanding: Basic $ 0.19 $ (0.48 ) Diluted $ 0.19 $ (0.48 ) At December 31, 2021, there were outstanding options that were vested and exercisable into 150 300 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | NOTE 6: SHARE-BASED COMPENSATION The following table summarizes the activity of our nonvested restricted shares for the years ended December 31, 2021 and 2020: Nonvested restricted stock activity Restricted Weighted- Nonvested at December 31, 2019 260 $ 0.72 Granted – – Vested (110 ) 0.82 Cancellations & Forfeitures (150 ) 0.65 Nonvested at December 31, 2020 – $ – Granted – – Vested – – Cancellations & Forfeitures – – Nonvested at December 31, 2021 – $ – The following table summarizes the activity of our nonvested stock options for the years ended December 31, 2021 and 2020: Schedule of option activity Shares Underlying Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Outstanding at December 31, 2019 225 $ 0.68 4.7 Granted 200 0.47 Vested (225 ) 0.59 Outstanding at December 31, 2020 200 $ 0.57 4.1 Vested (150 ) 0.51 Outstanding at December 31, 2021 50 $ 0.76 3.1 Exercisable at December 31, 2021 450 $ 0.59 3.9 For the years ended December 31, 2021 and 2020, we recognized a total of $ 48 117 0 48 0.05 |
TREASURY STOCK
TREASURY STOCK | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
TREASURY STOCK | NOTE 7: TREASURY STOCK During the year ended December 31, 2020, the Company repurchased an aggregate of 743 524 495 248 Additionally, the Company purchased 3 0.43 1 No shares of common stock were purchased during the year ended December 31, 2021. On December 31, 2021, the Company had 3,517 Treasury shares are accounted for using the cost method. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 8: INCOME TAXES Income tax expense is comprised of the following: Provision for income taxes Year Ended December 31, 2021 2020 Federal: Current $ 92 $ – Deferred 20 10 Total $ 112 $ 10 State: Current $ 20 $ 13 Deferred (20 ) (10 ) Total $ – $ 3 Total income tax expense $ 112 $ 13 Income tax expense (benefit) differs from the amount computed by applying the U.S. statutory income tax rate to loss before income taxes for the reasons set forth below. Reconciliation of effective income tax rate Year Ended December 31, 2021 2020 Income tax expense (benefit) at federal statutory rate 21.00 % (21.00 )% State tax (benefit) expense, net of federal benefit (0.16 )% 0.01 % Valuation allowance (0.38 )% 20.76 % Research and development credits 0.48 % 0.21 % Other permanent differences 0.25 % 0.24 % PPP loan forgiveness (19.13 )% 0.00 % Foreign withholding taxes 2.97 % 0.00 % Other, net (0.45 )% 0.00 % Total effective rate 4.58 % 0.21 % 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 follows: Schedule of deferred taxes December 31, 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 5,191 $ 5,339 R&D and other credit carryforwards 638 650 Share-based compensation 784 774 Intangible amortization 1 6 Allowance for bad debt 115 18 Other 51 137 Total deferred tax assets $ 6,780 $ 6,924 Less: valuation allowance (6,628 ) (6,637 ) Net deferred tax assets $ 152 $ 287 Deferred tax liabilities: Depreciation on property and equipment $ (152 ) $ (287 ) Total deferred tax liabilities $ (152 ) $ (287 ) Net deferred tax position $ – $ – We have $ 24,223 1,380 638 no |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9: COMMITMENTS AND CONTINGENCIES 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. We had no Employment Agreement Our Chief Executive Officer is employed under an employment agreement containing severance provisions. In the event of termination of the CEO’s employment for any reason, the CEO will be entitled to receive all accrued, unpaid salary and vacation time through the date of termination and all benefits to which the CEO is entitled or vested under the terms of all employee benefit and compensation plans, agreements, and arrangements in which the CEO participants as of the date of termination. In addition, subject to executing a general release in favor of the Company, the CEO 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 CEO with “good reason.” These severance payments include: (i) a lump sum in cash equal to one to two times the CEO’s annual base salary; (ii) a lump sum in cash equal to one to two times the average annual bonus paid to the CEO 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 the CEO’s annual base salary; and (iv) if the CEO’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 CEO shall immediately vest and become exercisable. On April 1, 2020, the Company eliminated the position of Chief Operating Officer (“COO”) and relieved the COO of his duties pursuant to the terms of his employment agreement. In addition to payment of accrued and unpaid salary, vacation time, and other benefits referred to above, the Company was required to pay the former COO one time his contractual annual base salary of $245, payable over 12 months. This amount is included in selling, general and administrative expenses in the accompanying consolidated statements of operations for the twelve months ended December 31, 2020. Litigation From time to time, the Company is party to various legal proceedings arising in the ordinary course of business. The Company expenses or accrues legal costs as incurred and is involved in only one material legal proceeding as of December 31, 2021. In November 2011, the Company delivered equipment to Aker Solutions, Inc. (“Aker”), but Aker declined to pay the final invoice in the aggregate amount of $270 alleging some warranty items needed to be repaired. The Company made repairs, but Aker continued to claim further work was required. The Company repeatedly attempted to collect on the receivable and ultimately filed suit on November 16, 2012, in the Harris County District Court. Aker subsequently filed a counter claim on March 20, 2013 in the aggregate amount of $1,000 for reimbursement of insurance payments allegedly made for repairs. On March 9, 2022, the parties convened for mediation but did not reach a resolution on this matter. At this point, it is not clear as to whether an unfavorable outcome is either probable or remote, and the Company is unable to determine the likelihood of an unfavorable outcome or the amount or range of potential loss if the outcome should be unfavorable. On August 6, 2018, GE Oil and Gas UK Ltd. (“GE”) requested that the Company mediate a dispute between the parties in the ICC International Centre for ADR (“ICC”). The dispute involved alleged delays and defects in products manufactured by the Company for GE dating back to 2013. During the second quarter of 2020, the parties finalized the terms of a definitive settlement agreement which is now final and binding. Per the terms of the settlement, the Company paid GE an aggregate of $750, on a monthly basis, through December 2021. The Company accrued a liability related to this matter in the amount of $750 for the year ended December 31, 2019. The remaining liability was $ 420 no |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 10: RELATED PARTY TRANSACTIONS On August 15, 2019, Mr. Ronald E. Smith, the Company's Founder, resigned as Chief Executive Officer and as a member of the Board, effective as of August 31, 2019. In connection with Mr. Smith's resignation, the Company entered into a Transition Agreement with him, effective as of September 1, 2019 (the “Transition Agreement”). The Transition Agreement provided for Mr. Smith to serve as an independent consultant to the Company from September 1, 2019 through December 31, 2021. The Company agreed to pay Mr. Smith $ 42 15 In addition to the other payments provided for under the Transition Agreement, the Company also agreed to pay Mr. Smith 1.5% of the net sale or lease value of two carousels owned by Company, if such sale or lease occurred prior to December 31, 2021, and subject to certain other conditions. Such carousels were not sold prior to December 31, 2021, and $ 5 As part of the Transition Agreement, Mr. Smith is bound by certain non-disclosure and confidentiality provisions, and a non-compete and non-hire agreement. On January 5, 2022, the Company repurchased 234 150 119 |
SMALL BUSINESS ADMINISTRATION_S
SMALL BUSINESS ADMINISTRATION’S PAYCHECK PROTECTION PROGRAM LOAN | 12 Months Ended |
Dec. 31, 2021 | |
Small Business Administrations Paycheck Protection Program Loan | |
SMALL BUSINESS ADMINISTRATION’S PAYCHECK PROTECTION PROGRAM LOAN | NOTE 11: SMALL BUSINESS ADMINISTRATION’S PAYCHECK PROTECTION PROGRAM LOAN The Company obtained a $ 1,111 1,111 The Company obtained a second $ 1,111 1,111 |
Employee Retention Credit
Employee Retention Credit | 12 Months Ended |
Dec. 31, 2021 | |
Employee Retention Credit | |
Employee Retention Credit | NOTE 12: Employee Retention Credit Under the provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020 and the subsequent extension of the CARES Act, the Company was eligible for a refundable employee retention credit subject to certain criteria. Since there are no generally accepted accounting principles for for-profit business entities that receive government assistance that is not in the form of a loan, an income tax credit or revenue from a contract with a customer, we determined the appropriate accounting treatment by analogy to other guidance. The Company accounted for the employee retention credit by analogy to International Accounting Standards (IAS) 20, “Accounting for Government Grants and Disclosure of Government Assistance, of International Financial Reporting Standards (IFRS).” Under an IAS 20 analogy, a business entity would recognize the employee retention credit on a systematic basis over the periods in which the entity recognizes the payroll expenses for which the grant (i.e., tax credit) is intended to compensate when there is reasonable assurance (i.e., it is probable) that the entity will comply with any conditions attached to the grant and the grant (i.e., tax credit) will be received. The Company recognized a $ 650 650 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 13: SUBSEQUENT EVENTS We have evaluated subsequent events through the date the consolidated financial statements were filed with the Securities and Exchange Commission. On February 22, 2022, Deep Down, Inc., a Nevada corporation. (the "Company”), entered into an Agreement and Plan of Merger (the "Merger Agreement”) providing for the merger of the Company with the Company’s wholly-owned subsidiary, Koil Energy Solutions, Inc. (the "Merger Sub” and, the transaction, the "Merger”). As permitted by Chapter 92A.180 of Nevada Revised Statutes, the purpose of the Merger is to effect a change of the Company’s name from Deep Down, Inc., to Koil Energy Solutions, Inc. (the "Name Change”). On February 25, 2022, in connection with the foregoing, the Company filed an Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority ("FINRA”), requesting confirmation of the Name Change. On February 28, 2022, in connection with the foregoing, the Company filed an Issuer Company-Related Action Notification Form with FINRA, requesting a change of the Company’s ticker symbol (the "Symbol Change”). Subject to approval by FINRA, the Name Change and Symbol Change will not affect the rights of the Company’s security holders. The Company’s securities will continue to be quoted on the OTC Markets. Following the Name Change, the stock certificates, which reflect the name of the Company prior to the Merger, will continue to be valid. Certificates reflecting the Name Change will be issued in due course as old stock certificates are tendered for exchange or transfer to the Company’s transfer agent. |
DESCRIPTION OF BUSINESS AND S_2
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business Deep Down, Inc., a Nevada corporation (“Deep Down Nevada”), and its direct wholly owned subsidiary, Deep Down, Inc., a Delaware corporation (“Deep Down Delaware”, and together with Deep Down Nevada, “Deep Down”, “we”, “us” or the “Company”), is an energy services company that provides equipment and support services to the world’s energy and offshore industries. Deep Down provides innovative solutions to complex customer challenges presented between the production facility and the energy source. Deep Down's core services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, and related services. Additionally, Deep Down's team can support subsea engineering, manufacturing, installation, commissioning, and maintenance projects located anywhere in the world. |
Liquidity | Liquidity Deep Down’s cash on hand was $ 3,676 7,098 3,745 4,080 The Company believes it will have adequate liquidity to meet its future operating requirements through a combination of cash on hand, cash expected to be generated from operations, potential sales of PP&E, disciplined capital investments, and securing a credit facility. However, given the volatility in oil prices and the impact on global economic activity caused by the COVID-19 pandemic, as well as recent increases in raw materials costs and ongoing supply chain constraints, the Company cannot predict this with certainty. To mitigate this uncertainty and preserve liquidity, the Company will continue to pursue opportunistic cost containment initiatives, which can include workforce alignment and limiting overhead spending and research and development efforts to only critical items. Summary of Significant Accounting Policies and Estimates |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Deep Down and its wholly owned subsidiary for the years ended December 31, 2021 and 2020. All intercompany transactions and balances have been eliminated. |
Use of Estimates | Use of Estimates The preparation of these financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) requires us to make estimates and judgments that may affect assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition and related allowances, contract assets and liabilities, impairments of long-lived assets, income taxes including the valuation allowance for deferred tax assets, contingencies and litigation, and share-based payments. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. |
Segments | Segments For the years ended December 31, 2021 and 2020, the Company’s operations were organized as one reportable segment. |
Cash and Cash Equivalents | 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 which, at times, may exceed federally insured limits. |
Fair Value of Financial Instruments | 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, accounts receivables and payables, and notes receivable (included in other assets). The carrying values of cash, accounts receivables, and payables approximated their fair values at December 31, 2021 and 2020 due to their short-term maturities. The carrying values of our notes receivable approximate their fair values at December 31, 2021 and 2020 because the interest rates approximate current market rates. |
Accounts Receivable | Accounts Receivable Accounts receivable are uncollateralized customer obligations due under normal trade terms. The Company provides an allowance on accounts receivables based on a specific review of each customer’s accounts receivable balance with respect to its ability to make payments. Generally, the Company does not charge interest on past due accounts. When specific accounts are determined to require an allowance, they are expensed by a provision for bad debts in that period. At December 31, 2021 and 2020, the Company estimated the allowance for doubtful accounts requirement to be $ 525 84 442 238 |
Concentration of Revenues and Credit Risk | Concentration of Revenues and Credit Risk Deep Down’s revenues are derived from the sale of products and services to customers who participate in the offshore sector of the energy industry. Customers may be similarly affected by economic and other changes in the energy industry. For the year ended December 31, 2021, our five largest customers accounted for 44 13 11 6 6 43 10 8 8 5 As of December 31, 2021, three of our customers accounted for 34 29 10 52 12 9 |
Property, plant and equipment | Property, plant and equipment PP&E is stated at cost, net of accumulated depreciation, amortization, and related impairments. Depreciation and amortization are 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 finance 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 consolidated statements of operations. If circumstances associated with our PP&E have changed or a significant event has occurred that may affect the recoverability of the carrying amount of our PP&E, an impairment indicator exists, and we test the PP&E for impairment. Before testing for impairment, we group PP&E with other finite-lived long-lived assets (“long-lived assets”) at the lowest level of identifiable cash flows that are largely independent of cash flows from other assets or groups of assets. Testing long-lived assets for impairment is a two-step process: Step 1 - We test the long-lived asset group for recoverability by comparing the carrying amount of the asset group with the sum of the undiscounted future cash flows from use and the eventual disposal of the asset group. If the carrying amount of the long-lived asset group is determined to be greater than the sum of the undiscounted future cash flows from use and disposal, we would need to perform step 2. Step 2 - If the long-lived group of assets fails the recoverability test in step 1, we would record an impairment expense for the difference between the carrying amount and the fair value of the long-lived asset group. During the year ended December 31, 2021, the Company conducted assessments of whether impairment indicators were present that indicate the carrying amount of its long-lived asset (group) might not be recoverable and determined that no such events or changes in circumstances were present. During the year ended December 31, 2020, the Company recorded a charge of $ 4,490 The valuation of impaired equipment is a Level 3 non-recurring fair value measurement. Impaired assets discussed above were written down to zero value. |
Lease Obligations | Lease Obligations At the inception of a lease, Deep Down evaluates the agreement to determine whether the lease will be accounted for as an operating or finance 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 if the contract contains a substantial penalty for failure to renew or extend the lease, it could lead the lessee to conclude it has a significant economic incentive to extend the lease beyond the base rental period. Deep Down leases land, buildings, vehicles, and certain equipment under non-cancellable operating leases. The Company leases office, indoor manufacturing, warehouse, and operating space in Houston, Texas and leases storage space in Mobile, Alabama to house its 3,400 metric ton and 3,500 metric ton carousel systems. |
Lease Concessions | Lease Concessions As it relates to lease concessions related to its leases affected by economic disruption caused by the COVID-19 pandemic, the Company elected to account for the deferred payments as variable lease payments. As such, the Company recorded a reduction to rent expense in the period of the deferral. When the Company later incurs the deferred rent, it will recognize it as variable rent expense. |
Income Taxes | Income Taxes We follow the asset and liability method of accounting for income taxes. This method considers 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 | Share-Based Compensation We record share-based 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, 2021, the Company’s shared-based compensation was in the form of stock options. At December 31, 2020, the Company had two types of share-based compensation: stock options and restricted stock. See further discussion in Note 6. |
Earnings or Loss per Common Share | 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) 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. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12 “Income Taxes (Topic 740).” Topic 740 is effective for fiscal years and interim periods beginning after December 15, 2020. This update simplifies the accounting for income taxes by removing certain exceptions such as the exception to the incremental approach for intra-period tax allocation, the exception to the requirement to recognize a deferred tax liability for equity method investments, the exception to the ability not to recognize a deferred tax liability for a foreign subsidiary and the exception to the general methodology for calculating income taxes in an interim period. The adoption of ASU No. 2019-12 did not have a material impact on our financial statements and disclosures. In November 2019, the FASB issued ASU No. 2019-10 “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates.” The FASB issued this update to extend and simplify how effective dates are staggered between larger public companies and all other entities for the aforementioned major updates. Topic 326 is effective for fiscal years and interim periods beginning after December 15, 2022 for smaller reporting companies. We are currently evaluating the impact of these updates on our financial statements and related disclosures, but at this time, we do not expect a material impact on our financial statements and disclosures. |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases | |
Operating lease assets and liabilities | Operating lease assets and liabilities December 31, 2021 December 31, 2020 Assets: Right-of-use assets $ 1,861 $ 3,174 Liabilities: Current lease liabilities 1,306 1,261 Non-current lease liabilities 588 1,951 Total lease liabilities $ 1,894 $ 3,212 |
Components of lease expense | Components of lease expense Year Ended December 31, 2021 2020 Operating lease expense included in Cost of sales $ 1,259 $ 977 Operating lease expense included in SG&A 169 139 Short term lease expense 309 194 Total lease expense $ 1,737 $ 1,310 December 31, 2021 December 31, 2020 Weighted-average remaining lease terms on operating leases (yrs.) 1.43 2.43 Weighted-average discount rates on operating leases 5.374 5.374 |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenues | Disaggregation of Revenues Year Ended December 31, 2021 2020 Fixed Price Contracts $ 6,867 $ 8,664 Service Contracts 10,366 4,313 Total $ 17,233 $ 12,977 |
Schedule of earnings in excess of billings on uncompleted contracts | Schedule of earnings in excess of billings on uncompleted contracts December 31, 2021 December 31, 2020 Costs incurred on uncompleted contracts $ 1,312 $ 2,098 Estimated earnings on uncompleted contracts 1,485 3,153 Gross costs and estimated earnings 2,797 5,251 Less: Billings to date on uncompleted contracts (2,695 ) (5,792 ) Costs incurred plus estimated earning less billings on uncompleted contracts, net $ 102 $ (541 ) Included in the accompanying consolidated balance sheets under the following captions: Contract assets $ 352 $ 189 Contract liabilities (250 ) (730 ) Costs incurred plus estimated earning less billings on uncompleted contract $ 102 $ (541 ) |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Net Property, plant and equipment | Net Property, plant and equipment Range of December 31, 2021 December 31, 2020 Asset Lives Buildings and improvements $ 285 $ 285 7 - 36 years Leasehold improvements 899 906 2 - 5 years Equipment 11,885 12,343 2 - 30 years Furniture, computers and office equipment 429 907 2 - 8 years Construction in progress 60 84 – Total property, plant and equipment 13,558 14,525 Less: Accumulated depreciation and amortization (11,831 ) (11,921 ) Property, plant and equipment, net $ 1,727 $ 2,604 |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Net income (loss) per share: | |
Reconciliation of number of shares in earnings per share calculation | Reconciliation of number of shares in earnings per share calculation Year Ended December 31, 2021 2020 Numerator: Net income (loss) $ 2,326 $ (6,057 ) Denominator: Weighted average number of common shares outstanding: Basic 12,389 12,495 Diluted 12,454 12,495 Earnings (loss) per common share outstanding: Basic $ 0.19 $ (0.48 ) Diluted $ 0.19 $ (0.48 ) |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Nonvested restricted stock activity | Nonvested restricted stock activity Restricted Weighted- Nonvested at December 31, 2019 260 $ 0.72 Granted – – Vested (110 ) 0.82 Cancellations & Forfeitures (150 ) 0.65 Nonvested at December 31, 2020 – $ – Granted – – Vested – – Cancellations & Forfeitures – – Nonvested at December 31, 2021 – $ – |
Schedule of option activity | Schedule of option activity Shares Underlying Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Outstanding at December 31, 2019 225 $ 0.68 4.7 Granted 200 0.47 Vested (225 ) 0.59 Outstanding at December 31, 2020 200 $ 0.57 4.1 Vested (150 ) 0.51 Outstanding at December 31, 2021 50 $ 0.76 3.1 Exercisable at December 31, 2021 450 $ 0.59 3.9 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Provision for income taxes | Provision for income taxes Year Ended December 31, 2021 2020 Federal: Current $ 92 $ – Deferred 20 10 Total $ 112 $ 10 State: Current $ 20 $ 13 Deferred (20 ) (10 ) Total $ – $ 3 Total income tax expense $ 112 $ 13 |
Reconciliation of effective income tax rate | Reconciliation of effective income tax rate Year Ended December 31, 2021 2020 Income tax expense (benefit) at federal statutory rate 21.00 % (21.00 )% State tax (benefit) expense, net of federal benefit (0.16 )% 0.01 % Valuation allowance (0.38 )% 20.76 % Research and development credits 0.48 % 0.21 % Other permanent differences 0.25 % 0.24 % PPP loan forgiveness (19.13 )% 0.00 % Foreign withholding taxes 2.97 % 0.00 % Other, net (0.45 )% 0.00 % Total effective rate 4.58 % 0.21 % |
Schedule of deferred taxes | Schedule of deferred taxes December 31, 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 5,191 $ 5,339 R&D and other credit carryforwards 638 650 Share-based compensation 784 774 Intangible amortization 1 6 Allowance for bad debt 115 18 Other 51 137 Total deferred tax assets $ 6,780 $ 6,924 Less: valuation allowance (6,628 ) (6,637 ) Net deferred tax assets $ 152 $ 287 Deferred tax liabilities: Depreciation on property and equipment $ (152 ) $ (287 ) Total deferred tax liabilities $ (152 ) $ (287 ) Net deferred tax position $ – $ – |
DESCRIPTION OF BUSINESS AND S_3
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Product Information [Line Items] | ||
Cash | $ 3,676 | $ 3,745 |
Working capital | 7,098 | 4,080 |
Allowance for doubtful accounts | 525 | 84 |
Bad debt expense | 442 | 238 |
Loss on asset impairment | $ 0 | $ 4,490 |
Total Revenues [Member] | Customer Concentration Risk [Member] | Customer 1 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 44.00% | 43.00% |
Total Revenues [Member] | Customer Concentration Risk [Member] | Customer 2 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 13.00% | 10.00% |
Total Revenues [Member] | Customer Concentration Risk [Member] | Customer 3 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 11.00% | 8.00% |
Total Revenues [Member] | Customer Concentration Risk [Member] | Customer 4 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 6.00% | 8.00% |
Total Revenues [Member] | Customer Concentration Risk [Member] | Customer 5 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 6.00% | 5.00% |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer 1 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 34.00% | 52.00% |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer 2 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 29.00% | 12.00% |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer 3 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 10.00% | 9.00% |
LEASES (Details - Operating lea
LEASES (Details - Operating lease info) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Assets: | ||
Right-of-use assets | $ 1,861 | $ 3,174 |
Liabilities: | ||
Current lease liabilities | 1,306 | 1,261 |
Non-current lease liabilities | 588 | 1,951 |
Total lease liabilities | $ 1,894 | $ 3,212 |
LEASES (Details - Operating L_2
LEASES (Details - Operating Lease Expense) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Short term lease expense | $ 309 | $ 194 |
Total lease expense | $ 1,737 | $ 1,310 |
Weighted average remaining lease (years) terms on operating leases | 1 year 5 months 4 days | 2 years 5 months 4 days |
Weighted average discount rates on operating leases | 5.374% | 5.374% |
Cost of Sales [Member] | ||
Operating lease expense | $ 1,259 | $ 977 |
Selling, General and Administrative Expenses [Member] | ||
Operating lease expense | $ 169 | $ 139 |
LEASES (Details - Minimum lease
LEASES (Details - Minimum lease payments) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Leases | ||
Future minimum lease payment 2022 | $ 1,371 | |
Future minimum lease payment 2023 | 582 | |
Future minimum lease payment 2024 | 8 | |
Future minimum lease payment 2025 | 5 | |
Total lease payments | 1,966 | |
Less: interest | (72) | |
Present value of lease liabilities | $ 1,894 | $ 3,212 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details - Disaggregation of Revenue) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 17,233 | $ 12,977 |
Fixed-price Contract [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 6,867 | 8,664 |
Servicing Contracts [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 10,366 | $ 4,313 |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details - Contract balances) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||
Costs incurred on uncompleted contracts | $ 1,312 | $ 2,098 |
Estimated earnings on uncompleted contracts | 1,485 | 3,153 |
Gross costs and estimated earnings | 2,797 | 5,251 |
Less: Billings to date on uncompleted contracts | (2,695) | (5,792) |
Costs incurred plus estimated earning less billings on uncompleted contracts, net | 102 | (541) |
Included in the accompanying consolidated balance sheets under the following captions: | ||
Contract assets | 352 | 189 |
Contract liabilities | (250) | (730) |
Costs incurred plus estimated earning less billings on uncompleted contract | $ 102 | $ (541) |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 13,558 | $ 14,525 |
Less: Accumulated depreciation and amortization | (11,831) | (11,921) |
Property, plant and equipment, net | 1,727 | 2,604 |
Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 285 | 285 |
Range of Asset Lives | 7 - 36 years | |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 899 | 906 |
Range of Asset Lives | 2 - 5 years | |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 11,885 | 12,343 |
Range of Asset Lives | 2 - 30 years | |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 429 | 907 |
Range of Asset Lives | 2 - 8 years | |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 60 | $ 84 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense excluded from cost of sales | $ 663 | $ 830 |
Depreciation expense | $ 288 | $ 252 |
EARNINGS PER COMMON SHARE (Deta
EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | ||
Net income (loss) | $ 2,326 | $ (6,057) |
Denominator: | ||
Basic | 12,389 | 12,495 |
Diluted | 12,454 | 12,495 |
Earnings (loss) per common share outstanding: | ||
Basic | $ 0.19 | $ (0.48) |
Diluted | $ 0.19 | $ (0.48) |
EARNINGS PER COMMON SHARE (De_2
EARNINGS PER COMMON SHARE (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Outstanding Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 150 | 300 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details - Restricted stock activity) - Restricted Stock [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Nonvested Outstanding, beginning balance | 0 | 260 |
Nonvested Outstanding, beginning balance | $ 0 | $ 0.72 |
Granted | 0 | 0 |
Granted | $ 0 | $ 0 |
Vested | 0 | (110) |
Vested | $ 0 | $ 0.82 |
Cancellations & Forfeitures | 0 | (150) |
Cancellations & Forfeitures | $ 0 | $ 0.65 |
Nonvested Outstanding, ending balance | 0 | 0 |
Nonvested Outstanding, ending balance | $ 0 | $ 0 |
SHARE-BASED COMPENSATION (Det_2
SHARE-BASED COMPENSATION (Details - Stock options) - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |||
Outstanding, beginning balance | 200 | 225 | |
Exercise Price, beginning balance | $ 0.57 | $ 0.68 | |
Weighted- Average Remaining Contractual Term | 3 years 1 month 6 days | 4 years 1 month 6 days | 4 years 8 months 12 days |
Granted | 200 | ||
Granted | $ 0.47 | ||
Vested | (150) | (225) | |
Vested | $ 0.51 | $ 0.59 | |
Outstanding, ending balance | 50 | 200 | 225 |
Exercise Price, ending balance | $ 0.76 | $ 0.57 | $ 0.68 |
Outstanding, exercisable | 450 | ||
Exercise Price, exercisable | $ 0.59 | ||
Weighted- Average Remaining Contractual Term, exercisable | 3 years 10 months 24 days |
SHARE-BASED COMPENSATION (Det_3
SHARE-BASED COMPENSATION (Details Narrative) - Restricted Stock Awards [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation | $ 48 | $ 117 |
Unamortized estimated fair value of restricted stock awards | $ 0 | $ 48 |
Unamortized expense recognition period | 18 days |
TREASURY STOCK (Details Narrati
TREASURY STOCK (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |
Dec. 23, 2019 | Dec. 31, 2020 | Dec. 31, 2021 | |
Equity, Class of Treasury Stock [Line Items] | |||
Stock repurchases, Share | 743 | ||
Stock purchased, Value | $ 525 | ||
Common stock held in treasury | 3,517,000 | ||
2019 Repurchase Program [Member] | |||
Equity, Class of Treasury Stock [Line Items] | |||
Stock repurchases, Share | 495 | ||
Stock purchased, Value | $ 524 | ||
Shares authorized to be repurchase | 248 | ||
2019 Repurchase Program [Member] | Additional [Member] | |||
Equity, Class of Treasury Stock [Line Items] | |||
Stock repurchases, Share | 3 | ||
Stock purchased, Value | $ 1 | ||
Shares price | $ 0.43 |
INCOME TAXES (Details - Provisi
INCOME TAXES (Details - Provision for income taxes) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Federal: | ||
Current | $ 92 | $ 0 |
Deferred | 20 | 10 |
Total | 112 | 10 |
State: | ||
Current | 20 | 13 |
Deferred | (20) | (10) |
Total | 0 | 3 |
Total income tax expense | $ 112 | $ 13 |
INCOME TAXES (Details - Tax rat
INCOME TAXES (Details - Tax rates) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) at federal statutory rate | 21.00% | (21.00%) |
State tax (benefit) expense, net of federal benefit | (0.16%) | 0.01% |
Valuation allowance | (0.38%) | 20.76% |
Research and development credits | 0.48% | 0.21% |
Other permanent differences | 0.25% | 0.24% |
PPP loan forgiveness | (19.13%) | 0.00% |
Foreign withholding taxes | 2.97% | 0.00% |
Other, net | (0.45%) | 0.00% |
Total effective rate | 4.58% | 0.21% |
INCOME TAXES (Details - Deferre
INCOME TAXES (Details - Deferred tax assets) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 5,191 | $ 5,339 |
R&D and other credit carryforwards | 638 | 650 |
Share-based compensation | 784 | 774 |
Intangible amortization | 1 | 6 |
Allowance for bad debt | 115 | 18 |
Other | 51 | 137 |
Total deferred tax assets | 6,780 | 6,924 |
Less: valuation allowance | (6,628) | (6,637) |
Net deferred tax assets | 152 | 287 |
Deferred tax liabilities: | ||
Depreciation on property and equipment | (152) | (287) |
Total deferred tax liabilities | (152) | (287) |
Net deferred tax position | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Federal NOL carryforwards | $ 24,223 | |
State NOL carryforwards | 1,380 | |
R&D & other credit carryforwards | 638 | $ 650 |
Uncertain tax positions | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Commitments and Contingencies Disclosure [Abstract] | ||
Letters Of Credit Outstanding | $ 0 | $ 0 |
Estimated Litigation Liability | $ 0 | $ 420 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Mar. 24, 2022 | Jan. 05, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2019 |
Related Party Transaction [Line Items] | |||||
Commissions paid | $ 5,000 | ||||
Stock Repurchased During Period, Shares | 743 | ||||
Payments for Repurchase of Common Stock | 0 | $ 525,000 | |||
Smith [Member] | |||||
Related Party Transaction [Line Items] | |||||
Stock Repurchased During Period, Shares | 119 | 234 | |||
Payments for Repurchase of Common Stock | $ 150 | ||||
Mr. Ronald E. Smith [Member] | |||||
Related Party Transaction [Line Items] | |||||
Severance payable | $ 15,000 | $ 42,000 |
SMALL BUSINESS ADMINISTRATION_2
SMALL BUSINESS ADMINISTRATION’S PAYCHECK PROTECTION PROGRAM LOAN (Details Narrative) - SBA Paycheck Protection Program [Member] - USD ($) $ in Thousands | Sep. 10, 2021 | Jun. 29, 2021 | Mar. 31, 2021 | Apr. 30, 2020 |
Offsetting Assets [Line Items] | ||||
Proceeds from loans | $ 1,111 | $ 1,111 | ||
Forgiveness recived | $ 1,111 | $ 1,111 |
Employee Retention Credit (Deta
Employee Retention Credit (Details Narrative) | 12 Months Ended |
Dec. 31, 2021USD ($) | |
Employee Retention Credit | |
[custom:EmployeeRetentionCredit] | $ 650 |
[custom:EmployeeRetentionReceivable-0] | $ 650 |