Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 27, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 000-30351 | ||
Entity Registrant Name | KOIL ENERGY SOLUTIONS, INC. | ||
Entity Central Index Key | 0001110607 | ||
Entity Tax Identification Number | 75-2263732 | ||
Entity Incorporation, State or Country Code | NV | ||
Entity Address, Address Line One | 1310 Rankin Road | ||
Entity Address, City or Town | Houston | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 77073 | ||
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 | $ 4,275,838 | ||
Entity Common Stock, Shares Outstanding | 11,888,202 | ||
ICFR Auditor Attestation Flag | false | ||
Document Financial Statement Error Correction [Flag] | false | ||
Auditor Firm ID | 659 | ||
Auditor Name | Moss Adams LLP | ||
Auditor Location | Houston, Texas |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 2,030 | $ 2,353 |
Accounts receivable, net | 4,228 | 2,920 |
Employee retention tax credit receivable | 323 | 650 |
Inventory | 430 | 202 |
Contract assets | 480 | 281 |
Prepaid expenses and other current assets | 358 | 204 |
Total current assets | 7,849 | 6,610 |
Property, plant and equipment, net | 2,968 | 3,305 |
Intangibles, net | 72 | 62 |
Right-of-use operating lease assets | 5,856 | 6,184 |
Right-of-use finance lease assets | 103 | 275 |
Other assets | 214 | 179 |
Total assets | 17,062 | 16,615 |
Current liabilities: | ||
Accounts payable and accrued expenses | 3,353 | 1,516 |
Contract liabilities | 1,377 | 333 |
Current operating lease liabilities | 480 | 863 |
Current finance lease liabilities | 74 | 277 |
Total current liabilities | 5,284 | 2,989 |
Operating lease liability, long-term | 6,136 | 6,518 |
Finance lease liability, long-term | 24 | 0 |
Total liabilities | 11,444 | 9,507 |
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, 2023 and December 31, 2022 | 16 | 16 |
Additional paid-in capital | 73,840 | 73,776 |
Treasury stock, 4,017,808 shares at December 31, 2023 and December 31, 2022, at cost | (3,135) | (3,135) |
Accumulated deficit | (65,103) | (63,549) |
Total stockholders’ equity | 5,618 | 7,108 |
Total liabilities and stockholders’ equity | $ 17,062 | $ 16,615 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
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 | 4,017,808 | 4,017,808 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Statement [Abstract] | ||
Revenues | $ 15,343 | $ 12,977 |
Costs and expenses | ||
Cost of sales | 10,493 | 8,292 |
Selling, general and administrative | 6,460 | 6,873 |
Right-of-use operating lease asset impairment | 0 | 820 |
Total costs and expenses | 16,953 | 15,985 |
Operating loss | (1,610) | (3,008) |
Interest (income) expense, net | (7) | 15 |
Other income, net | (50) | (55) |
Gain on sale of property, plant and equipment | (4) | (40) |
Loss before income tax expense | (1,549) | (2,928) |
Income tax expense | 5 | 0 |
Net loss | $ (1,554) | $ (2,928) |
Net loss per share: | ||
Basic | $ (0.13) | $ (0.24) |
Fully diluted | $ (0.13) | $ (0.24) |
Weighted-average shares outstanding: | ||
Basic | 11,888 | 11,981 |
Fully diluted | 11,888 | 11,981 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock, Common [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2021 | $ 16 | $ 73,686 | $ (2,809) | $ (60,621) | $ 10,272 |
Beginning balance, shares at Dec. 31, 2021 | 15,906 | ||||
Net loss | (2,928) | (2,928) | |||
Treasury shares purchased | (326) | (326) | |||
Share-based compensation | 90 | 90 | |||
Ending balance, value at Dec. 31, 2022 | $ 16 | 73,776 | (3,135) | (63,549) | 7,108 |
Ending balance, shares at Dec. 31, 2022 | 15,906 | ||||
Net loss | (1,554) | (1,554) | |||
Share-based compensation | 64 | 64 | |||
Ending balance, value at Dec. 31, 2023 | $ 16 | $ 73,840 | $ (3,135) | $ (65,103) | $ 5,618 |
Ending balance, shares at Dec. 31, 2023 | 15,906 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (1,554) | $ (2,928) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Share-based compensation | 64 | 90 |
Depreciation and amortization | 605 | 682 |
Gain on sale of property, plant and equipment | (4) | (40) |
Bad debt expense (recovery) | 1 | (9) |
Non-cash lease expense | 723 | 398 |
Loss on right-of-use operating lease asset impairment | 0 | 820 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (982) | 3,018 |
Contract assets | (199) | 71 |
Inventories | (228) | 52 |
Prepaid expenses and other current assets | (155) | (103) |
Other assets | (83) | (98) |
Accounts payable and accrued expenses | 971 | (794) |
Contract liabilities | 1,044 | 83 |
Net cash provided by operating activities | 203 | 1,242 |
Cash flows from investing activities: | ||
Proceeds from sale of property, plant and equipment | 4 | 271 |
Purchases of property, plant and equipment | (230) | (2,537) |
Payments received on note receivable | 0 | 4 |
Net cash used in investing activities | (226) | (2,262) |
Cash flows from financing activities: | ||
Repurchase of common shares | 0 | (250) |
Principal payments under finance lease obligations | (300) | (53) |
Net cash used in financing activities | (300) | (303) |
Change in cash | (323) | (1,323) |
Cash, beginning of year | 2,353 | 3,676 |
Cash, end of year | 2,030 | 2,353 |
Supplemental schedule of non-cash investing and financing activities: | ||
Shares of common stock received in exchange for property, plant and equipment | $ 0 | $ 76 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Pay vs Performance Disclosure [Table] | ||
Net Income (Loss) Attributable to Parent | $ (1,554) | $ (2,928) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 | |
Insider Trading Arrangements [Line Items] | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
DESCRIPTION OF BUSINESS AND SUM
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES | 12 Months Ended |
Dec. 31, 2023 | |
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 Koil Energy Solutions, Inc., a Nevada corporation (“Koil Energy Nevada”), and its direct wholly owned subsidiary, Koil Energy Solutions, Inc., a Delaware corporation (“Koil Energy Delaware”, and together with Koil Energy Nevada, “Koil Energy”, “we”, “us” or the “Company”), is an energy services company that provides equipment and support services to the world’s energy and offshore industries. The Company provides innovative solutions to complex customer challenges presented between the production facility and the energy source. Koil Energy’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, Koil Energy’s experienced professionals can support subsea engineering, manufacturing, installation, commissioning, and maintenance projects located anywhere in the world. The Company’s broad line of solutions are engineered and manufactured primarily for major integrated, large independent, and foreign national energy companies in offshore areas throughout the world. These products are often developed in direct response to customer requests for solutions to critical needs in the field. The Company primarily serves the offshore oil and gas market; however, the Company’s product offerings and service capabilities are based on core competencies that are energy source agnostic and can be applied to additional markets, including offshore wind, offshore wave energy, hydrogen, and liquefied natural gas. Liquidity Koil Energy’s cash on hand was $ 2,030 2,565 2,353 3,621 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, and potential sales of PP&E. Given the inherent volatility in oil prices and global economic activity, the Company cannot predict this with certainty. To mitigate this uncertainty, the Company exercises discipline when making capital investments and pursues opportunistic cost containment initiatives, which can include workforce alignment, limiting overhead spending, and limiting research and development efforts to only critical items. Additionally, on May 24, 2023, the Company entered into a Purchase and Sale Agreement/Security Agreement with Zions Bancorporation, N.A., d/b/a Amegy Bank Business Credit (“Amegy”), which provides for Koil Energy from time to time to sell its accounts receivable and other rights to payment to Amegy, subject to Amegy’s right to approve or reject future accounts receivable and other rights proposed for sale, in its sole discretion. Any receivables sold shall bear an interest rate computed as Wall Street Journal Prime Rate (“Prime Rate”) plus 2.00%. The Prime Rate has a floor and at no time shall it be less than 8.00% for the purposes of this agreement. At December 31, 2023, the Company had no outstanding sales of accounts receivable to Amegy. Summary of Significant Accounting Policies and Estimates Principles of Consolidation The consolidated financial statements include the accounts of Koil Energy for the years ended December 31, 2023 and 2022. 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, 2023 and 2022, the Company’s operations were organized as one reportable segment and one operating 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 receivable and accounts payable. The carrying values of cash, accounts receivables, and payables approximated their fair values at December 31, 2023 and 2022 due to their short-term maturities. Accounts Receivable and Allowance for Credit Losses Accounts receivable are uncollateralized customer obligations due under normal trade terms. The estimation of anticipated credit losses that may be incurred as we work through the invoice collection process with our customers requires us to make judgments and estimates regarding our customers’ ability to pay amounts due. We monitor our customers’ payment history and current credit worthiness, if needed, to determine that collectability is reasonably assured. We provide an allowance for credit losses based by reviewing each accounts receivable balance with respect to a debtor’s ability to make payments. We also evaluate historical loss rates as well as consider forward-looking factors specific to the debtors, the overall economic environment, and management expectations to determine expected losses. Generally, we do not charge interest on past due accounts. When certain accounts are determined to require an allowance, they are expensed by a provision for bad debts in that period. At December 31, 2023 and 2022, we estimated the allowance for credit losses requirement to be $ 0 1 (9 Concentration of Revenues and Credit Risk Koil Energy’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, 2023, our five largest customers accounted for 29 19 14 10 6 31 13 12 9 6 As of December 31, 2023, three of our customers accounted for 47 13 10 50 12 9 Inventory Koil maintains an inventory of components that would otherwise have long lead times to purchase as needed. Inventory costs are determined principally by the use of the specific identification method. Company manufactured inventory is valued using direct costs incurred. We periodically review the value of items in inventory and record write-downs or write-offs of inventory based on our assessment of obsolescence or marketability. We did not record any write-downs or write-offs of inventory in recent years. 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 years ended December 31, 2023 and December 31, 2022, 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. Lease Obligations 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. 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 and impairment. At the inception of a lease, Koil Energy 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 Company to conclude it has a significant economic incentive to extend the lease beyond the base rental period. See further discussion in Note 2. 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. These awards are valued at the grant date fair market value using the closing price of our stock on the QB Tier of the OTC Markets Group. Share-based compensation expense is generally recognized over the expected term of the award on a straight-line basis, and forfeitures are recorded as they occur. At December 31, 2023 and December 31, 2022, the Company’s share-based compensation was in the form of stock options. 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 income or loss by the weighted-average number of common shares outstanding for the period. Diluted EPS is calculated by dividing net income 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 November 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2019-10 “Financial Instruments—Credit Losses (Topic 326).” 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 updates. Topic 326 is effective for fiscal years and interim periods beginning after December 15, 2022 for smaller reporting companies. The adoption of ASU No. 2019-10 did not have a material impact on our financial statements and disclosures. In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures,” which requires significant additional disclosures about income taxes, primarily focused on the disclosure of income taxes paid and the rate reconciliation table. The new guidance will be applied prospectively (with retrospective application permitted) and is effective in the 2025 annual period and in 2026 for interim periods, with early adoption permitted. We are currently evaluating the impact of this amendment on our consolidated financial statements. We consider the applicability and impact of all ASUs. We assessed ASUs not listed above and determined that they either were not applicable or were not expected to have a material impact on our financial statements. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
LEASES | NOTE 2: LEASES We lease land, buildings, 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. We classify our leases related to certain office furniture and computer equipment as financing leases. 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. Most leases include one or more options to renew, with renewal terms that can extend the lease term on a monthly, annual or longer basis. The exercise of lease renewal options is at the Company’s sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements is limited by the expected lease term unless there is a transfer of title or purchase option that is reasonably certain of being exercised. 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. For the year ended December 31, 2022, the Company recorded impairment charges of $ 820 As of December 31, 2023 and 2022, the Company does not have any subleases. The following tables present information about our operating and finance leases: Schedule of operating and finance leases Classification December 31, 2023 December 31, 2022 Assets Operating Right-of-use operating lease assets $ 5,856 $ 6,184 Finance Right-of-use finance lease assets 103 275 Total lease assets $ 5,959 $ 6,459 Liabilities Current Operating Current operating lease liabilities $ 480 $ 863 Finance Current finance lease liabilities 74 277 Non-current Operating Operating lease liability, long-term 6,136 6,518 Finance Finance lease liability, long-term 24 – Total lease liabilities $ 6,714 $ 7,658 The components of our lease expense were as follows: Schedule of components of our lease expense Year Ended December 31, Classification 2023 2022 Finance lease costs Amortization of ROU assets Selling, general and administrative $ 292 $ 104 Interest on lease liabilities Interest (income) expense, net 10 2 Operating lease expense Cost of sales 735 1,238 Operating lease expense Selling, general and administrative 230 172 Short term lease expense Cost of sales 306 494 Total lease expense $ 1,271 $ 1,904 The lease term and discount rate for our operating and financing leases were as follows: Schedule of lease term and discount rate December 31, 2023 December 31, 2022 Weighted-average remaining lease terms (years) Operating leases 8.7 8.4 Finance leases 1.7 0.0 Weighted-average discount rates Operating leases 7.97 6.25 Finance leases 7.44 8.23 Present value of lease liabilities : Schedule of present value of lease liabilities Years ending December 31, Operating Leases Finance Leases 2024 $ 990 $ 78 2025 1,006 13 2026 1,021 13 2027 1,041 – Thereafter 5,233 – Total lease payments $ 9,291 $ 104 Less: Interest (2,675 ) (6 ) Present value of lease liabilities $ 6,616 $ 98 For the year ended December 31, 2023, the Company did not have any sale/leaseback transactions. We had no material non-cash financing or operating leases entered into during the year ended December 31, 2023. Supplemental cash flow information related to leases for the years ended December 31, 2023 and 2022 Schedule of lease obligations Year Ended December 31, 2023 2022 Right-of-use assets obtained in exchange for lease liabilities Operating leases $ 101 6,345 Finance leases 122 328 |
REVENUE FROM CONTRACTS WITH CUS
REVENUE FROM CONTRACTS WITH CUSTOMERS | 12 Months Ended |
Dec. 31, 2023 | |
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. Schedule of disaggregation of revenues Year Ended December 31, 2023 2022 Fixed price contracts $ 6,951 $ 4,941 Service contracts 8,392 8,036 Total $ 15,343 $ 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 a contract modification 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 on a monthly basis. Payment terms for services are usually 30 days from invoice receipt but have increased to 45, 60, or 90 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 2023 and 2022, 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, 2023 December 31, 2022 Costs incurred on uncompleted contracts $ 2,575 $ 342 Estimated earnings on uncompleted contracts 399 465 Estimated loss on uncompleted contracts (130 ) – Gross costs and estimated earnings 2,844 807 Less: Billings to date on uncompleted contracts (3,741 ) (859 ) Costs incurred plus estimated earning less billings on uncompleted contracts, net $ (897 ) $ (52 ) Accounts receivable, net, contract assets, and contract liabilities consisted of the following: Schedule of accounts receivable, net, contract assets, and contract liabilities December 31, 2023 December 31, 2022 December 31, 2021 Accounts receivable, net $ 4,228 $ 2,920 $ 5,929 Contract assets 480 281 352 Contract liabilities 1,377 333 250 Total accounts receivable, net, contract assets, and contract liabilities $ 1,857 $ 614 $ 602 Contract assets and liabilities fluctuate period to period based on various factors, including, among others, changes in the number and size of projects in progress at period end; variability in billing and payment terms, such as up-front or advance billings, interim or milestone billings, or deferred billings; and recognized unapproved change orders and contract claims. 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 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 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 allowing 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, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | NOTE 4: PROPERTY, PLANT AND EQUIPMENT Net property, plant and equipment consisted of the following: Schedule of net property, plant and equipment December 31, 2023 December 31, 2022 Range of Asset Lives Leasehold improvements $ 2,272 $ 2,228 lease term Equipment 5,861 5,698 2 - 30 years Furniture, computers and office equipment 180 180 2 - 8 years Construction in progress – 8 - Total property, plant and equipment 8,313 8,114 Less: Accumulated depreciation (5,345 ) (4,809 ) Property, plant and equipment, net $ 2,968 $ 3,305 Depreciation expense included in cost of sales in the accompanying consolidated statements of operations was $ 497 496 53 124 Construction in progress represents assets that are not ready for service or are in the construction stage. Assets are depreciated once they are placed into service. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
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. Schedule of reconciliation of number of shares in earnings per share calculation Year Ended December 31, 2023 2022 Numerator: Net loss $ (1,554 ) $ (2,928 ) Denominator: Weighted average number of common shares outstanding: Basic 11,888 11,981 Diluted 11,888 11,981 Loss per common share outstanding: Basic $ (0.13 ) $ (0.24 ) Diluted $ (0.13 ) $ (0.24 ) At December 31, 2023 and 2022, there were outstanding options that were vested and exercisable into 875 725 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
SHARE-BASED COMPENSATION | NOTE 6: SHARE-BASED COMPENSATION On August 2, 2023, the Company’s independent directors each received stock options to purchase 50,000 0.55 0.32 25 On October 20, 2022, the Company’s independent directors each received stock options to purchase 50,000 0.63 0.39 25 The following table summarizes the activity of our nonvested stock options for the years ended December 31, 2023 and 2022: Schedule of option activity Shares Underlying Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (in years) Outstanding at December 31, 2021 125 $ 0.74 4.0 Granted 150 0.63 Vested (200 ) 0.70 Outstanding at December 31, 2022 75 0.63 4.8 Granted 150 0.55 Vested (150 ) 0.59 Outstanding at December 31, 2023 75 $ 0.55 4.6 Exercisable at December 31, 2023 875 $ 0.63 2.0 For the years ended December 31, 2023 and 2022, we recognized a total of $ 64 90 24 40 0.42 |
TREASURY STOCK
TREASURY STOCK | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
TREASURY STOCK | NOTE 7: TREASURY STOCK No 500 326 4,018 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 8: INCOME TAXES Income tax expense is comprised of the following: Schedule of income tax expense Year Ended December 31, 2023 2022 Federal: Current $ – $ – Deferred – – Total – – State: Current 5 – Deferred – – Total 5 – Total income tax expense (benefit) $ 5 $ – 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. Schedule of income tax expense (benefit) Year Ended December 31, 2023 2022 Income tax benefit at federal statutory rate (21.00)% (21.00)% State tax expense (benefit), net of federal benefit 0.23 % (0.01)% Valuation allowance 20.49 % 21.10 % Research and development credits 0.45 % 0.04 % Other permanent differences 0.17 % (0.14)% Total effective rate 0.34 % 0.00 % 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 carryforwards. The tax effects of the temporary differences and carry forwards are as follows: Schedule of deferred income taxes December 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 6,090 $ 5,748 Research and development and other credit carryforwards 630 637 Share-based compensation 816 803 Intangible amortization (12 ) – Right-of-use operating lease liabilities 1,389 1,550 Other (5 ) (12 ) Total deferred tax assets 8,908 8,726 Less: valuation allowance (7,546 ) (7,235 ) Net deferred tax assets $ 1,362 $ 1,491 Deferred tax liabilities: Depreciation on property and equipment $ (132 ) $ (113 ) Right-of-use operating lease assets (1,230 ) (1,378 ) Total deferred tax liabilities $ (1,362 ) $ (1,491 ) Net deferred tax position $ – $ – We have $ 28,513 1,336 630 no |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 9: COMMITMENTS AND CONTINGENCIES Employment Agreement Our Chief Executive Officer (“CEO”) 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 participates 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. 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 not involved in any material legal proceedings as of the date of these financial statements. 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. The parties convened for mediation on March 9, 2022, and on May 9, 2022, the Company and Aker finalized the terms of a definitive settlement agreement with a mutual dismissal with prejudice of all claims by and between them. The Company subsequently reversed a liability accrual of $ 100 no |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 10: RELATED PARTY TRANSACTIONS On January 5, 2022, the Company repurchased 235 150 119 |
EMPLOYEE RETENTION CREDIT
EMPLOYEE RETENTION CREDIT | 12 Months Ended |
Dec. 31, 2023 | |
Employee Retention Credit | |
EMPLOYEE RETENTION CREDIT | NOTE 11: 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. 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 initially recognized a $ 650 323 344 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12: SUBSEQUENT EVENTS On March 4, 2024, Mr. Charles K. Njuguna resigned as President, Chief Executive Officer, Chief Financial Officer and as a member of the board of directors (the “Board”) of the Company, effective as of March 31, 2024. As a result of his resignation, the Company and Mr. Njuguna agreed to terminate the employment agreement dated effective September 1, 2019, between the Company and Mr. Njuguna. The termination of Mr. Njuguna’s employment agreement is effective as of March 31, 2024. The resignation of Mr. Njuguna did not involve any disagreement with the Company. On March 6, 2024, the Board appointed Erik Wiik as the Company’s Chief Executive Officer, effective April 1, 2024, and on March 8, 2024, the Board appointed Mr. Wiik as a member of the Board, effective immediately. Mr. Wiik, age 60, most recently served as President of ReAdapt Inc., an engineering consultancy firm providing subject matter expertise within subsea technology, since July 2018. In connection with Mr. Wiik’s appointment, the Company entered into an employment agreement with Mr. Wiik (the “Employment Agreement”), with an effective date of April 1, 2024. Under the terms of the Employment Agreement, Mr. Wiik is entitled to receive an annual base salary (the amount of which is $325,000), subject to annual adjustment by the Company’s Board. Mr. Wiik is also entitled to receive an annual bonus based upon the achievement of financial objectives by the Company, which objectives shall be set by the Board annually. Further, the Employment Agreement provides that Mr. Wiik is eligible to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to all other peer executives of the Company, to receive fringe benefits in accordance with the plans, practices, programs and policies of the Company for other peer executives, and to receive reimbursement for reasonable business expenses. In the event of a change of control (as defined in the Employment Agreement), the awards and grants to Mr. Wiik that are comprised of or based upon equity securities under the Company’s plans, practices, policies and programs will immediately vest. The Employment Agreement provides that if any payment or distribution to an executive would be subject to any additional tax or excise tax, or any interest or penalties are incurred by Mr. Wiik with respect to such excise tax, then Mr. Wiik will be entitled to receive from the Company an additional payment (“Gross-Up Payment”) in an amount such that after payment of all taxes Mr. Wiik will retain an amount of the Gross-Up Payment equal to the tax imposed upon such payment or distribution. In the event of termination of Mr. Wiik’s employment for any reason, Mr. Wiik will be entitled to receive all accrued, unpaid salary and vacation time through the date of termination and all benefits to which Mr. Wiik is entitled or vested under the terms of all employee benefit and compensation plans, agreements and arrangements in which Mr. Wiik is a participant as of the date of termination. In addition, subject to executing a general release in favor of the Company, Mr. Wiik will be entitled to receive certain severance payments in the event his employment is terminated by the Company “other than for cause” or by Mr. Wiik with “good reason.” These severance payments include the following: (i) a lump sum in cash equal to one time Mr. Wiik’s annual base salary (at the rate in effect on the date of termination); (ii) 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; provided, however, that such pro rata portion shall be calculated based on Mr. Wiik’s annual bonus for the previous fiscal year; provided further that if no previous annual bonus has been paid to Mr. Wiik, then the lump sum cash payment shall be no less than fifty percent of Executive’ annual base salary; and (iii) if Mr. Wiik’s termination occurs prior to the date that is twelve months following a Change in Control (as defined in the Employment Agreement), then each and every share option, restricted share award and other equity-based award that is outstanding and held by Mr. Wiik shall immediately vest and become exercisable. Mr. Wiik has agreed, during the term of his employment and for a one-year period after his termination, not to engage in Competition (as defined in the Employment Agreement) with the Company, solicit business from any customer or potential customer of the Company, solicit the employment or services of any person employed by or a consultant to the Company on the date of termination or with six months prior thereto, or otherwise knowingly interfere with the business or accounts of the Company or any of its subsidiaries. The Employment Agreement also provides that the Company, to the extent permitted by applicable law and the by-laws of the Company, will defend, indemnify and hold harmless Mr. Wiik from any and all claims, demands or causes of action, including reasonable attorneys’ fees and expenses, suffered or incurred by Mr. Wiik as a result of the assertion or filing of any claim, demand, litigation or other proceedings based upon statements, acts or omissions made by or on behalf of Mr. Wiik pursuant to the Employment Agreement or in the course and scope of Mr. Wiik’s employment with the Company. The Company will also maintain and pay all applicable premiums for directors’ and officers’ liability insurance which shall provide full coverage for the defense and indemnification of Mr. Wiik, to the fullest extent permitted by applicable law. In connection with entering into the Employment Agreement, the Company granted 300,000 shares of restricted stock, and options for 300,000 shares, to Mr. Wiik. Each of the foregoing will vest in three equal installments on the anniversaries of the grant date. The above description of the Employment Agreement is qualified in its entirety by reference to the full text of the Employment Agreement, a copy of which is filed as Exhibit 10.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. No family relationship exists between Mr. Wiik and any of the Company’s directors or executive officers. There are no arrangements or understandings between Mr. Wiik and any other person pursuant to which Mr. Wiik was selected as an officer of the Company, nor are there any transactions to which the Company is or was a participant and in which Mr. Wiik had or will have a direct or indirect material interest subject to disclosure under Item 404(a) of Regulation S-K. |
DESCRIPTION OF BUSINESS AND S_2
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Description of Business | Description of Business Koil Energy Solutions, Inc., a Nevada corporation (“Koil Energy Nevada”), and its direct wholly owned subsidiary, Koil Energy Solutions, Inc., a Delaware corporation (“Koil Energy Delaware”, and together with Koil Energy Nevada, “Koil Energy”, “we”, “us” or the “Company”), is an energy services company that provides equipment and support services to the world’s energy and offshore industries. The Company provides innovative solutions to complex customer challenges presented between the production facility and the energy source. Koil Energy’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, Koil Energy’s experienced professionals can support subsea engineering, manufacturing, installation, commissioning, and maintenance projects located anywhere in the world. The Company’s broad line of solutions are engineered and manufactured primarily for major integrated, large independent, and foreign national energy companies in offshore areas throughout the world. These products are often developed in direct response to customer requests for solutions to critical needs in the field. The Company primarily serves the offshore oil and gas market; however, the Company’s product offerings and service capabilities are based on core competencies that are energy source agnostic and can be applied to additional markets, including offshore wind, offshore wave energy, hydrogen, and liquefied natural gas. |
Liquidity | Liquidity Koil Energy’s cash on hand was $ 2,030 2,565 2,353 3,621 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, and potential sales of PP&E. Given the inherent volatility in oil prices and global economic activity, the Company cannot predict this with certainty. To mitigate this uncertainty, the Company exercises discipline when making capital investments and pursues opportunistic cost containment initiatives, which can include workforce alignment, limiting overhead spending, and limiting research and development efforts to only critical items. Additionally, on May 24, 2023, the Company entered into a Purchase and Sale Agreement/Security Agreement with Zions Bancorporation, N.A., d/b/a Amegy Bank Business Credit (“Amegy”), which provides for Koil Energy from time to time to sell its accounts receivable and other rights to payment to Amegy, subject to Amegy’s right to approve or reject future accounts receivable and other rights proposed for sale, in its sole discretion. Any receivables sold shall bear an interest rate computed as Wall Street Journal Prime Rate (“Prime Rate”) plus 2.00%. The Prime Rate has a floor and at no time shall it be less than 8.00% for the purposes of this agreement. At December 31, 2023, the Company had no outstanding sales of accounts receivable to Amegy. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Koil Energy for the years ended December 31, 2023 and 2022. 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, 2023 and 2022, the Company’s operations were organized as one reportable segment and one operating 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 receivable and accounts payable. The carrying values of cash, accounts receivables, and payables approximated their fair values at December 31, 2023 and 2022 due to their short-term maturities. |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Accounts receivable are uncollateralized customer obligations due under normal trade terms. The estimation of anticipated credit losses that may be incurred as we work through the invoice collection process with our customers requires us to make judgments and estimates regarding our customers’ ability to pay amounts due. We monitor our customers’ payment history and current credit worthiness, if needed, to determine that collectability is reasonably assured. We provide an allowance for credit losses based by reviewing each accounts receivable balance with respect to a debtor’s ability to make payments. We also evaluate historical loss rates as well as consider forward-looking factors specific to the debtors, the overall economic environment, and management expectations to determine expected losses. Generally, we do not charge interest on past due accounts. When certain accounts are determined to require an allowance, they are expensed by a provision for bad debts in that period. At December 31, 2023 and 2022, we estimated the allowance for credit losses requirement to be $ 0 1 (9 |
Concentration of Revenues and Credit Risk | Concentration of Revenues and Credit Risk Koil Energy’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, 2023, our five largest customers accounted for 29 19 14 10 6 31 13 12 9 6 As of December 31, 2023, three of our customers accounted for 47 13 10 50 12 9 |
Inventory | Inventory Koil maintains an inventory of components that would otherwise have long lead times to purchase as needed. Inventory costs are determined principally by the use of the specific identification method. Company manufactured inventory is valued using direct costs incurred. We periodically review the value of items in inventory and record write-downs or write-offs of inventory based on our assessment of obsolescence or marketability. We did not record any write-downs or write-offs of inventory in recent years. |
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 years ended December 31, 2023 and December 31, 2022, 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. |
Lease Obligations | Lease Obligations 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. 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 and impairment. At the inception of a lease, Koil Energy 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 Company to conclude it has a significant economic incentive to extend the lease beyond the base rental period. See further discussion in Note 2. |
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. These awards are valued at the grant date fair market value using the closing price of our stock on the QB Tier of the OTC Markets Group. Share-based compensation expense is generally recognized over the expected term of the award on a straight-line basis, and forfeitures are recorded as they occur. At December 31, 2023 and December 31, 2022, the Company’s share-based compensation was in the form of stock options. 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 income or loss by the weighted-average number of common shares outstanding for the period. Diluted EPS is calculated by dividing net income 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 November 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2019-10 “Financial Instruments—Credit Losses (Topic 326).” 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 updates. Topic 326 is effective for fiscal years and interim periods beginning after December 15, 2022 for smaller reporting companies. The adoption of ASU No. 2019-10 did not have a material impact on our financial statements and disclosures. In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures,” which requires significant additional disclosures about income taxes, primarily focused on the disclosure of income taxes paid and the rate reconciliation table. The new guidance will be applied prospectively (with retrospective application permitted) and is effective in the 2025 annual period and in 2026 for interim periods, with early adoption permitted. We are currently evaluating the impact of this amendment on our consolidated financial statements. We consider the applicability and impact of all ASUs. We assessed ASUs not listed above and determined that they either were not applicable or were not expected to have a material impact on our financial statements. |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Schedule of operating and finance leases | Schedule of operating and finance leases Classification December 31, 2023 December 31, 2022 Assets Operating Right-of-use operating lease assets $ 5,856 $ 6,184 Finance Right-of-use finance lease assets 103 275 Total lease assets $ 5,959 $ 6,459 Liabilities Current Operating Current operating lease liabilities $ 480 $ 863 Finance Current finance lease liabilities 74 277 Non-current Operating Operating lease liability, long-term 6,136 6,518 Finance Finance lease liability, long-term 24 – Total lease liabilities $ 6,714 $ 7,658 |
Schedule of components of our lease expense | Schedule of components of our lease expense Year Ended December 31, Classification 2023 2022 Finance lease costs Amortization of ROU assets Selling, general and administrative $ 292 $ 104 Interest on lease liabilities Interest (income) expense, net 10 2 Operating lease expense Cost of sales 735 1,238 Operating lease expense Selling, general and administrative 230 172 Short term lease expense Cost of sales 306 494 Total lease expense $ 1,271 $ 1,904 |
Schedule of lease term and discount rate | Schedule of lease term and discount rate December 31, 2023 December 31, 2022 Weighted-average remaining lease terms (years) Operating leases 8.7 8.4 Finance leases 1.7 0.0 Weighted-average discount rates Operating leases 7.97 6.25 Finance leases 7.44 8.23 |
Schedule of present value of lease liabilities | Schedule of present value of lease liabilities Years ending December 31, Operating Leases Finance Leases 2024 $ 990 $ 78 2025 1,006 13 2026 1,021 13 2027 1,041 – Thereafter 5,233 – Total lease payments $ 9,291 $ 104 Less: Interest (2,675 ) (6 ) Present value of lease liabilities $ 6,616 $ 98 |
Schedule of lease obligations | Schedule of lease obligations Year Ended December 31, 2023 2022 Right-of-use assets obtained in exchange for lease liabilities Operating leases $ 101 6,345 Finance leases 122 328 |
REVENUE FROM CONTRACTS WITH C_2
REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregation of revenues | Schedule of disaggregation of revenues Year Ended December 31, 2023 2022 Fixed price contracts $ 6,951 $ 4,941 Service contracts 8,392 8,036 Total $ 15,343 $ 12,977 |
Schedule of earnings in excess of billings on uncompleted contracts | Schedule of earnings in excess of billings on uncompleted contracts December 31, 2023 December 31, 2022 Costs incurred on uncompleted contracts $ 2,575 $ 342 Estimated earnings on uncompleted contracts 399 465 Estimated loss on uncompleted contracts (130 ) – Gross costs and estimated earnings 2,844 807 Less: Billings to date on uncompleted contracts (3,741 ) (859 ) Costs incurred plus estimated earning less billings on uncompleted contracts, net $ (897 ) $ (52 ) |
Schedule of accounts receivable, net, contract assets, and contract liabilities | Schedule of accounts receivable, net, contract assets, and contract liabilities December 31, 2023 December 31, 2022 December 31, 2021 Accounts receivable, net $ 4,228 $ 2,920 $ 5,929 Contract assets 480 281 352 Contract liabilities 1,377 333 250 Total accounts receivable, net, contract assets, and contract liabilities $ 1,857 $ 614 $ 602 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of net property, plant and equipment | Schedule of net property, plant and equipment December 31, 2023 December 31, 2022 Range of Asset Lives Leasehold improvements $ 2,272 $ 2,228 lease term Equipment 5,861 5,698 2 - 30 years Furniture, computers and office equipment 180 180 2 - 8 years Construction in progress – 8 - Total property, plant and equipment 8,313 8,114 Less: Accumulated depreciation (5,345 ) (4,809 ) Property, plant and equipment, net $ 2,968 $ 3,305 |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of number of shares in earnings per share calculation | Schedule of reconciliation of number of shares in earnings per share calculation Year Ended December 31, 2023 2022 Numerator: Net loss $ (1,554 ) $ (2,928 ) Denominator: Weighted average number of common shares outstanding: Basic 11,888 11,981 Diluted 11,888 11,981 Loss per common share outstanding: Basic $ (0.13 ) $ (0.24 ) Diluted $ (0.13 ) $ (0.24 ) |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
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, 2021 125 $ 0.74 4.0 Granted 150 0.63 Vested (200 ) 0.70 Outstanding at December 31, 2022 75 0.63 4.8 Granted 150 0.55 Vested (150 ) 0.59 Outstanding at December 31, 2023 75 $ 0.55 4.6 Exercisable at December 31, 2023 875 $ 0.63 2.0 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax expense | Schedule of income tax expense Year Ended December 31, 2023 2022 Federal: Current $ – $ – Deferred – – Total – – State: Current 5 – Deferred – – Total 5 – Total income tax expense (benefit) $ 5 $ – |
Schedule of income tax expense (benefit) | Schedule of income tax expense (benefit) Year Ended December 31, 2023 2022 Income tax benefit at federal statutory rate (21.00)% (21.00)% State tax expense (benefit), net of federal benefit 0.23 % (0.01)% Valuation allowance 20.49 % 21.10 % Research and development credits 0.45 % 0.04 % Other permanent differences 0.17 % (0.14)% Total effective rate 0.34 % 0.00 % |
Schedule of deferred income taxes | Schedule of deferred income taxes December 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 6,090 $ 5,748 Research and development and other credit carryforwards 630 637 Share-based compensation 816 803 Intangible amortization (12 ) – Right-of-use operating lease liabilities 1,389 1,550 Other (5 ) (12 ) Total deferred tax assets 8,908 8,726 Less: valuation allowance (7,546 ) (7,235 ) Net deferred tax assets $ 1,362 $ 1,491 Deferred tax liabilities: Depreciation on property and equipment $ (132 ) $ (113 ) Right-of-use operating lease assets (1,230 ) (1,378 ) Total deferred tax liabilities $ (1,362 ) $ (1,491 ) 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, 2023 | Dec. 31, 2022 | |
Product Information [Line Items] | ||
Cash | $ 2,030 | $ 2,353 |
Working capital | 2,565 | 3,621 |
Allowance for credit losses | 0 | 0 |
Bad debt expense | $ 1 | $ (9) |
Total Revenues [Member] | Customer Concentration Risk [Member] | Customer 1 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 29% | 31% |
Total Revenues [Member] | Customer Concentration Risk [Member] | Customer 2 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 19% | 13% |
Total Revenues [Member] | Customer Concentration Risk [Member] | Customer 3 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 14% | 12% |
Total Revenues [Member] | Customer Concentration Risk [Member] | Customer 4 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 10% | 9% |
Total Revenues [Member] | Customer Concentration Risk [Member] | Customer 5 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 6% | 6% |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer 1 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 47% | 50% |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer 2 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 13% | 12% |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer 3 [Member] | ||
Product Information [Line Items] | ||
Concentration risk percentage | 10% | 9% |
LEASES (Details - Operating lea
LEASES (Details - Operating lease info) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Leases | ||
Operating, Right-of-use operating lease assets | $ 5,856 | $ 6,184 |
Finance, Right-of-use finance lease assets | 103 | 275 |
Total lease assets | 5,959 | 6,459 |
Operating, Current operating lease liabilities | 480 | 863 |
Finance, Current finance lease liabilities | 74 | 277 |
Operating Non-current, Operating lease liability, long-term | 6,136 | 6,518 |
Finance Non-current, Finance lease liability, long-term | 24 | 0 |
Total lease liabilities | $ 6,714 | $ 7,658 |
LEASES (Details - Components o
LEASES (Details - Components of lease expense) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Total lease expense | $ 1,271 | $ 1,904 |
Selling, General and Administrative Expenses [Member] | ||
Amortization of ROU assets | 292 | 104 |
Operating lease expense | 230 | 172 |
Interest Expense [Member] | ||
Interest on lease liabilities | 10 | 2 |
Cost of Sales [Member] | ||
Operating lease expense | 735 | 1,238 |
Short term lease expense | $ 306 | $ 494 |
LEASES (Details - Lease term a
LEASES (Details - Lease term and discount) | Dec. 31, 2023 | Dec. 31, 2022 |
Leases | ||
Weighted-average remaining lease terms on operating leases (years) | 8 years 8 months 12 days | 8 years 4 months 24 days |
Weighted-average remaining lease terms on finance leases (years) | 1 year 8 months 12 days | 0 years |
Weighted-average discount rates on operating leases | 7.97% | 6.25% |
Weighted-average discount rates on finance leases | 7.44% | 8.23% |
LEASES (Details - Present valu
LEASES (Details - Present value) $ in Thousands | Dec. 31, 2023 USD ($) |
Leases | |
Operating Leases, 2024 | $ 990 |
Finance Leases, 2024 | 78 |
Operating Leases, 2025 | 1,006 |
Finance Leases, 2025 | 13 |
Operating Leases, 2026 | 1,021 |
Finance Leases, 2026 | 13 |
Operating Leases, 2027 | 1,041 |
Finance Leases, 2027 | 0 |
Operating Leases, Thereafter | 5,233 |
Finance Leases, Thereafter | 0 |
Operating Leases, Total lease payments | 9,291 |
Finance Leases, Total lease payments | 104 |
Operating Leases, Less: Interest | (2,675) |
Finance Leases, Less: Interest | (6) |
Operating Leases, Present value of lease liabilities | 6,616 |
Finance Leases, Present value of lease liabilities | $ 98 |
LEASES (Details - Other inform
LEASES (Details - Other information) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases | ||
Operating leases | $ 101 | $ 6,345 |
Finance leases | $ 122 | $ 328 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases | ||
Impairment charges | $ 0 | $ 820 |
REVENUE FROM CONTRACTS WITH C_3
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details - Disaggregation of revenue) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 15,343 | $ 12,977 |
Fixed-Price Contract [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 6,951 | 4,941 |
Servicing Contracts [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 8,392 | $ 8,036 |
REVENUE FROM CONTRACTS WITH C_4
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details - Contract balances) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Costs incurred on uncompleted contracts | $ 2,575 | $ 342 |
Estimated earnings on uncompleted contracts | 399 | 465 |
Estimated loss on uncompleted contracts | (130) | 0 |
Gross costs and estimated earnings | 2,844 | 807 |
Less: Billings to date on uncompleted contracts | (3,741) | (859) |
Costs incurred plus estimated earning less billings on uncompleted contracts, net | $ (897) | $ (52) |
REVENUE FROM CONTRACTS WITH C_5
REVENUE FROM CONTRACTS WITH CUSTOMERS (Details - Accounts receivable, net) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | |||
Accounts receivable, net | $ 4,228 | $ 2,920 | $ 5,929 |
Contract assets | 480 | 281 | 352 |
Contract liabilities | 1,377 | 333 | 250 |
Total accounts receivable, net, contract assets, and contract liabilities | $ 1,857 | $ 614 | $ 602 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 8,313 | $ 8,114 |
Less: Accumulated depreciation and amortization | (5,345) | (4,809) |
Property, plant and equipment, net | 2,968 | 3,305 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 2,272 | 2,228 |
Range of Asset Lives | lease term | |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 5,861 | 5,698 |
Range of Asset Lives | 2 - 30 years | |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 180 | 180 |
Range of Asset Lives | 2 - 8 years | |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property, plant and equipment | $ 0 | $ 8 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense excluded from cost of sales | $ 497 | $ 496 |
Depreciation expense | $ 53 | $ 124 |
EARNINGS PER COMMON SHARE (Deta
EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Numerator: | ||
Net loss | $ (1,554) | $ (2,928) |
Denominator: | ||
Basic | 11,888 | 11,981 |
Diluted | 11,888 | 11,981 |
Loss per common share outstanding: | ||
Basic | $ (0.13) | $ (0.24) |
Diluted | $ (0.13) | $ (0.24) |
EARNINGS PER COMMON SHARE (De_2
EARNINGS PER COMMON SHARE (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Outstanding Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Outstanding options vested and exercisable | 875 | 725 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details - Stock options) - $ / shares | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | |||
Options Outstanding, beginning balance | 75 | 125 | |
Weighted Average Exercise Price, beginning balance | $ 0.63 | $ 0.74 | |
Weighted- Average Remaining Contractual Term | 4 years 7 months 6 days | 4 years 9 months 18 days | 4 years |
Options, Granted | 150 | 150 | |
Weighted Average Exercise Price, Granted | $ 0.55 | $ 0.63 | |
Options, Vested | (150) | (200) | |
Weighted Average Exercise Price, Vested | $ 0.59 | $ 0.70 | |
Options Outstanding, ending balance | 75 | 75 | 125 |
Weighted Average Exercise Price, ending balance | $ 0.55 | $ 0.63 | $ 0.74 |
Options Outstanding, exercisable | 875 | ||
Weighted Average Exercise Price, exercisable | $ 0.63 | ||
Weighted- Average Remaining Contractual Term, exercisable | 2 years |
SHARE-BASED COMPENSATION (Det_2
SHARE-BASED COMPENSATION (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||
Aug. 02, 2023 | Oct. 20, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Per share | $ 0.55 | $ 0.63 | $ 0.74 | ||
Restricted Stock Awards [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Share-based compensation | $ 64 | $ 90 | |||
Unamortized estimated fair value of restricted stock awards | $ 24 | $ 40 | |||
Unamortized expense recognition period | 5 months 1 day | ||||
Share-Based Payment Arrangement, Tranche One [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Vested percentage | 25% | 25% | |||
Share-Based Payment Arrangement, Tranche Two [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Vested percentage | 25% | 25% | |||
Share-Based Payment Arrangement, Tranche Three [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Vested percentage | 25% | 25% | |||
Share Based Compensation Award Tranche Four [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Vested percentage | 25% | 25% | |||
Independent Directors [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Stock options to purchase | 50,000 | 50,000 | |||
Per share | $ 0.55 | $ 0.63 | |||
Fair value of stock options | $ 0.32 | $ 0.39 |
TREASURY STOCK (Details Narrati
TREASURY STOCK (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Equity [Abstract] | ||
Stock purchased, shares | 0 | 500 |
Stock purchased, value | $ 326 | |
Treasury stock, sommon shares | 4,017,808 | 4,017,808 |
INCOME TAXES (Details - Provisi
INCOME TAXES (Details - Provision for income taxes) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Federal: | ||
Current | $ 0 | $ 0 |
Deferred | 0 | 0 |
Total | 0 | 0 |
State: | ||
Current | 5 | 0 |
Deferred | 0 | 0 |
Total | 5 | 0 |
Total income tax expense (benefit) | $ 5 | $ 0 |
INCOME TAXES (Details - Tax rat
INCOME TAXES (Details - Tax rates) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit at federal statutory rate | (21.00%) | (21.00%) |
State tax expense (benefit), net of federal benefit | 0.23% | (0.01%) |
Valuation allowance | 20.49% | 21.10% |
Research and development credits | 0.45% | 0.04% |
Other permanent differences | 0.17% | (0.14%) |
Total effective rate | 0.34% | 0% |
INCOME TAXES (Details - Deferre
INCOME TAXES (Details - Deferred tax assets) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 6,090 | $ 5,748 |
Research and development and other credit carryforwards | 630 | 637 |
Share-based compensation | 816 | 803 |
Intangible amortization | (12) | 0 |
Right-of-use operating lease liabilities | 1,389 | 1,550 |
Other | (5) | (12) |
Total deferred tax assets | 8,908 | 8,726 |
Less: valuation allowance | (7,546) | (7,235) |
Net deferred tax assets | 1,362 | 1,491 |
Deferred tax liabilities: | ||
Depreciation on property and equipment | (132) | (113) |
Right-of-use operating lease assets | (1,230) | (1,378) |
Total deferred tax liabilities | (1,362) | (1,491) |
Net deferred tax position | $ 0 | $ 0 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Income Tax Disclosure [Abstract] | ||
Federal NOL carryforwards | $ 28,513 | |
State NOL carryforwards | 1,336 | |
R&D & other credit carryforwards | 630 | $ 637 |
Uncertain tax positions | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) $ in Thousands | Dec. 31, 2022 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Liability accrual | $ 100 |
Litigation liability | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |||
Mar. 24, 2022 | Jan. 05, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Number of shares repurchased, shares | 0 | 500 | ||
Payments for repurchase of common stock | $ 0 | $ 250 | ||
Smith [Member] | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Number of shares repurchased, shares | 119 | 235 | ||
Payments for repurchase of common stock | $ 150 |
EMPLOYEE RETENTION CREDIT (Deta
EMPLOYEE RETENTION CREDIT (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2023 | |
Employee Retention Credit | |||
Employee retention credit | $ 650 | ||
Employee retention receivable | $ 323 | ||
Employee retention credit received | $ 344 |