AI
Friday, March 20, 2009 7:23:45 PM
Well here it goes... My trip to visit with the management of Deep Down.
To be quite frank I was heading down to Houston with a block on my shoulder,
I have lost money and was not to happy about it..
I kinda pride myself in my research of a company before I buy stock in it..
So this had me angry at myself and in turn I had grave doubts about Deep Down..
Now for those who are new to the stock within a week or so I asked folks to send me some questions that they would like to have answered by those who run this company.
I have always been taught if you really want to know what is going on with something go to the source and that is what I did.
I have posted some pictures along with this post so you all can see the new office.
(NOTE I AM NOT A FINANCIAL PROFESSIONAL OR A STOCK ADVISOR)
(I AM A HARD WORKING FATHER WHO IS DOING THE BEST I CAN WITH
WHAT LITTLE EDUCATION I HAVE)
O.K.
I landed in Houston around 3:30pm and after paying toll after toll on the loop going to the main office.
I arrived about 5:30 pm you can see a pic of the outside.
I'm thinking ok nice building new in a good section of town.
I get to the front door and this really nice lady buzzes me into the DPDP office (glass front doors) She says you must be (my name) I ask her can I take pictures she says no prob. Then offers me a soda.. (I think she is shy because when I got the camera out she bailed :})
She then showed me to Steve Haags' office.
It is quite the walk... near the back is Ron Smiths office. (there where still several folks working as we went by and now it is past 5:45pm)
We get to Ron's office and I just walk in and say are you the owner.
There is another person in there who I found out later is the CFO,
Ron Say yes I am the owner and you must be brwtrpilot. (LOL I'm thinking ok they are on the same page about me let's see if I can throw them first off to get the upper hand.)
I ask him straight up.
Ron there is great concern about the S-1 on many message boards and folks want to know what is going on ,can you tell me??..
(Get this he says sure give me few and I will meet you and Steve in the conference room)
(that took me by surprise)
Conference room.. (nice! One wall is pure smoked glass very classy I would not be ashamed to meet any CEO in that one)
RON comes in and it is on,
I have a list of questions and I said ok the S-1
and I am not a professional investor just a working Joe.
So please explain it so I can understand.,
This is how I understand what he said...
When DPDW wanted to expand they went to a firm to get some cash..
This firm in turn went to institutional investors who liked the idea and purchased stock at a fixed price.. I think it was around .70 cents a share ,
But in doing this there is a S1 statement that has to be sent to the S.E.C.
And in the purchase contract there was a section saying that if the S1 is not effective within 6 months DPDW is liable per day for I think he said $13,000 .
OK Ron did not want that in the contract but it is the standard so it had to be included..
Now this is where it gets to the nitty gritty
The deal is made and the paperwork is sent to the S.E.C.
And would you like to know what happens (not much ) And they waited...,
Ron called and sent letters and the response from the S.E.C. ??
We are understaffed we will get to it. And they wait some more .. more letters go out and nothing and then the time period is up and all of a sudden the contract
comes into play and this fine starts.
(Now Ron is showing much emotion while he is telling me this he is not a happy camper)
Well after much to do and their attorney ' s opinion it is set..
NOW DPDW attorney says max fee will be 1.2 million ...
and that is shown in the 10-k look for a one time write off...
Now DPDW will settle up later, I guess after the S-1 is effective.
And Ron said DPDW did all that was required on their part and they have dated letters to the S.E.C. Proving that DPDW was diligent on their part...
Now Steve points out even if their attorney did not come up with the 1.2 million max price for this mess caused by the S.E.C. etc.etc.
DPDW has paid off a major loan and the amortized interest they are saving by paying off that loan way more than covers those daily charges incurred by the S-1 contract....(and again DPDW ATTORNEY ' S OPINION IS THERE WILL NO LONGER BE A DAILY CHARGE THE MAX IS 1.2 MILLION ACCORDING TO RON SMITH)
Well heck I'm thinking cool this is a good thing.. please note in the pictures it is night when I get out of the meeting... I approached this subject from several different angles during the course of the meeting so I could understand and pass it along.
Is DDI's "quiet period" since June, 2008 self imposed? NO SEC
From what I understand SEC does not want any company pumping up a stock while they review the information. Steve says he has knows of several firms that this period has taken up to a year , but each filing is different...
see pages 56, 58, 59 in SEC Registration attachment, talking about the offer is a no no -- that includes calls,
SEC site of where to find the ruling, and the ruling itself
http://www.sec.gov/answers/quiet.htm
http://www.sec.gov/rules/final/33-8591.pdf
Our 10-K filing - http://idea.sec.gov/cgi-bin/browse-idea?company=&match=&CIK=dpdw&filenum=&State=&Country=&SIC=&owner=exclude&Find=Find+Companies&action=getcompany
Is DPDW on top of the S-1 situation? Yes , but the quiet period still applies till S1 is effective per Ron S. I asked him several times , but normal press and filings are ok.
So with that biggy out of the way I just took out the list of questions and handed them to Ron
#1 Why is management opposed to a shareholders meeting?
Ron is not opposed to the shareholders meeting but with
all that was going on with the S-1 until the paper work
is all under the bridge and behind us he can not do anything that would be considered
pumping up the stock..
In the future he is considering some to the following
A web cast shareholder meeting. Most likely just after the ¼ reports to help guys like me understand what the report means..
A video blog weekly to help keep us all abreast of what is up.
(I suggested that to Ron he seemed to like that idea)
#2 Why wasn't the recent departure of two top DDI executives publicly announced?
Understand this , Ron told me these men are great friends
There was no PR because the men were not top executives and
most important maybe a PR could of hurt their chance of future employment.
( I got the impression that the last was more important to Ron
ie their future and reputation)
#3 We can see from the cameras that things are quite busy in Houston, is most of this work going to existing clients or has Deep Down seen an increase in new inquiries from different (new)companies? Both New and Existing customers
And no the welders are not doing side jobs.
From what I understand as DPDW is growing so is their reputation and so are the opportunities for new customers...(They hedged on this as I think they are not allowed to say we are talking to so and so about this and that in the future back to the not pumping the stock, so I left it alone, But when I asked I got the feeling from the body language and the gleam in Ron's eye there are things afoot.
#4 You just bought a ROV why? What are your intentions are they needed ?do your client want them? We bought the ROV and plan on getting more as we can it is our intentions to have a ROV and crew on every rig in the gulf.
He seemed very excited about this it appeared to me that there is a need for this from clients and Ron has hired the right person to make this happen.
Ron got to talking about the ROVs and this is what I understand,
The ROVs are smaller than most in the industry for the expressed reason of being able to get into tight spots safely. He also said they have several tools on board and in use
that make the jobs quicker better and safer. And many of the designs were the brain child of his. Plus, the need is increasing a lot.
#5 What is the strategy behind having a privately held limited liability corp. for overseas acquisitions or securities TIA is useful for international jobs and contracts, but would say no more.
#6 Acquisitions, Tell me about the Electrowave, Mako, Flotation tech.
Why buy them can't Deep Down stand on it's own?
Ron said “brwtrpilot” you work on the water so you know how you learn to trust and respect those you work with over the years right?
So the men who own these firms are great friends who I have known for a lot of years.
Now you have to understand that Deep Down is a Service oriented company.
Each project is it own unique entity and over the years I saw what was needed to make a Job happen so I approached my friends and we have united our efforts under the Deep Down name. This allows DPDW the ability to streamline operations , in turn
this saves our client time and money, it has created a knowledge base that combines years of service in one of the world's most dangerous and demanding fields -- deep water operations. With this knowledge base and experience we and the firms that have been acquired, are working Safer and more proficient than they could as stand alone firms.
#6a is the company actively looking into another acquisition in any way at the moment? Just in general is the company "open" for this at present?" Always, but not in any hurry . It would have to complement Deep Down core (service).
#7 Does management really think that they deserve the large pay raises (bonus) that they are giving themselves considering the losses they created.. yes, Steve got a bit defensive, saying DPDW would be nothing without Ron, Gene, and Robert claiming they could easily go to work for more $ consulting at any other larger oil co,s (Houston has many)(Things got a little quiet but then Steve pulled out the 10-K and showed me
how if indeed there was not so many “one time write off charges this time” that they would indeed have made a profit.. and it is Gene who got the debt and bills out of the way so they could have a fighting chance in this economic environment..
I floated the idea that maybe they should tie their bonus to actual profit in a percent form. (Get this Ron wrote it down so maybe that will be something we see in the future.)
#8 Where is Deep Down headed your stock price bites right now what do you see for the future.
Steve pulled out a couple of independent research report excerpts one from Douglas Westwood
The World Deepwater Market Report 2009-2013 He then showed me updated information in the report that take into account the current world market... and industry wide it looks like 27 Billion yearly to be spent that includes exploration and production.
(I'm like, Steve that is all well and good but what about Deep Down how about our sub-sector?)
So he broke it down a little further for me.. and shows me a chart and on that chart there is a thing called a tree. Now this tree is not made by Deep Down but all of the stuff we make hooks into the tree.. now the award of the trees show an continued uptrend.
(look for the graph from Quest offshore Resources below)
But the Forcast spending for 2009 -2014 according to above for world subsea capital expenditures is (drumroll) $81.1 billion..
So there you go for the questions. I am sure I forgot stuff and I hope others will take the time to visit them..
One person wrote me before I went down and said have a good time look at their body language get a feel for them and let us know what you think..
So here you go when I first walked into the office it had a air of professionalism ,from the shy lady at the reception desk to the accountant and engineer and other staff working. When I first saw Ron and spoke to him I said to myself this is a man who
has a heart. One who is making his dream come true, a man not scared to get his hands dirty to make sure a job is done and done right.. Note, one of the things he loves to do
is go to the shop and design and weld new ideas. He is a builder and a thinker.
I feel he is really disgusted with the SEC and really heartbroken about the whole S-1 deal.
I get the impression that he is hurt by the loss his investors have incurred in the last few months..
But he does not strike me as the type of man who is going to lay down and cry uncle.. I think he is ready to fight to make “his child” grow.
And in fighting to make his child grow he is going to make this company a lot of money .
He has a strong handshake and looks a person in the eye when speaking.
If I was not writing I would say he is no..( ) you can add your own word there.
Steve showed his self to be articulate, patient, and intelligent.
He could get a 6 figure job in Houston any time he chose and has had the offers but he knows where Deep Down is headed and has cast his lot with them.
I did not get time to sit down with Gene but from his history taking a cash flow negative company and turning it into about a 2 Billion dollar a year business says a whole lot..
Note he does not need this job. He can afford not to work according to Ron and Steve,
But he has chosen to help build Deep Down..
So there you go folks that was my trip and impression...
What did I get from Deep Down besides information and a soda..
#1 a T-Shirt that says Deep Down gray in color
#2 A coffee Mug that says Deep Down
#3 Dinner paid for by Steve (thanks Steve nice chow)
That is it.
No stock, no money, just a infusion of knowledge that will pay off in the long run.
Hope this little trip to the Main Office of Deep Down help you all either make a few dollars or saves you a few depending on how you invest..
And I will say it again I am in No way a investment advisor. Or Stock Guru
I am just a run of the mill working class man who is trying to make a future for my family.
Good luck to all of you Brwtrpilot
To be quite frank I was heading down to Houston with a block on my shoulder,
I have lost money and was not to happy about it..
I kinda pride myself in my research of a company before I buy stock in it..
So this had me angry at myself and in turn I had grave doubts about Deep Down..
Now for those who are new to the stock within a week or so I asked folks to send me some questions that they would like to have answered by those who run this company.
I have always been taught if you really want to know what is going on with something go to the source and that is what I did.
I have posted some pictures along with this post so you all can see the new office.
(NOTE I AM NOT A FINANCIAL PROFESSIONAL OR A STOCK ADVISOR)
(I AM A HARD WORKING FATHER WHO IS DOING THE BEST I CAN WITH
WHAT LITTLE EDUCATION I HAVE)
O.K.
I landed in Houston around 3:30pm and after paying toll after toll on the loop going to the main office.
I arrived about 5:30 pm you can see a pic of the outside.
I'm thinking ok nice building new in a good section of town.
I get to the front door and this really nice lady buzzes me into the DPDP office (glass front doors) She says you must be (my name) I ask her can I take pictures she says no prob. Then offers me a soda.. (I think she is shy because when I got the camera out she bailed :})
She then showed me to Steve Haags' office.
It is quite the walk... near the back is Ron Smiths office. (there where still several folks working as we went by and now it is past 5:45pm)
We get to Ron's office and I just walk in and say are you the owner.
There is another person in there who I found out later is the CFO,
Ron Say yes I am the owner and you must be brwtrpilot. (LOL I'm thinking ok they are on the same page about me let's see if I can throw them first off to get the upper hand.)
I ask him straight up.
Ron there is great concern about the S-1 on many message boards and folks want to know what is going on ,can you tell me??..
(Get this he says sure give me few and I will meet you and Steve in the conference room)
(that took me by surprise)
Conference room.. (nice! One wall is pure smoked glass very classy I would not be ashamed to meet any CEO in that one)
RON comes in and it is on,
I have a list of questions and I said ok the S-1
and I am not a professional investor just a working Joe.
So please explain it so I can understand.,
This is how I understand what he said...
When DPDW wanted to expand they went to a firm to get some cash..
This firm in turn went to institutional investors who liked the idea and purchased stock at a fixed price.. I think it was around .70 cents a share ,
But in doing this there is a S1 statement that has to be sent to the S.E.C.
And in the purchase contract there was a section saying that if the S1 is not effective within 6 months DPDW is liable per day for I think he said $13,000 .
OK Ron did not want that in the contract but it is the standard so it had to be included..
Now this is where it gets to the nitty gritty
The deal is made and the paperwork is sent to the S.E.C.
And would you like to know what happens (not much ) And they waited...,
Ron called and sent letters and the response from the S.E.C. ??
We are understaffed we will get to it. And they wait some more .. more letters go out and nothing and then the time period is up and all of a sudden the contract
comes into play and this fine starts.
(Now Ron is showing much emotion while he is telling me this he is not a happy camper)
Well after much to do and their attorney ' s opinion it is set..
NOW DPDW attorney says max fee will be 1.2 million ...
and that is shown in the 10-k look for a one time write off...
Now DPDW will settle up later, I guess after the S-1 is effective.
And Ron said DPDW did all that was required on their part and they have dated letters to the S.E.C. Proving that DPDW was diligent on their part...
Now Steve points out even if their attorney did not come up with the 1.2 million max price for this mess caused by the S.E.C. etc.etc.
DPDW has paid off a major loan and the amortized interest they are saving by paying off that loan way more than covers those daily charges incurred by the S-1 contract....(and again DPDW ATTORNEY ' S OPINION IS THERE WILL NO LONGER BE A DAILY CHARGE THE MAX IS 1.2 MILLION ACCORDING TO RON SMITH)
Well heck I'm thinking cool this is a good thing.. please note in the pictures it is night when I get out of the meeting... I approached this subject from several different angles during the course of the meeting so I could understand and pass it along.
Is DDI's "quiet period" since June, 2008 self imposed? NO SEC
From what I understand SEC does not want any company pumping up a stock while they review the information. Steve says he has knows of several firms that this period has taken up to a year , but each filing is different...
see pages 56, 58, 59 in SEC Registration attachment, talking about the offer is a no no -- that includes calls,
SEC site of where to find the ruling, and the ruling itself
http://www.sec.gov/answers/quiet.htm
http://www.sec.gov/rules/final/33-8591.pdf
Our 10-K filing - http://idea.sec.gov/cgi-bin/browse-idea?company=&match=&CIK=dpdw&filenum=&State=&Country=&SIC=&owner=exclude&Find=Find+Companies&action=getcompany
Is DPDW on top of the S-1 situation? Yes , but the quiet period still applies till S1 is effective per Ron S. I asked him several times , but normal press and filings are ok.
So with that biggy out of the way I just took out the list of questions and handed them to Ron
#1 Why is management opposed to a shareholders meeting?
Ron is not opposed to the shareholders meeting but with
all that was going on with the S-1 until the paper work
is all under the bridge and behind us he can not do anything that would be considered
pumping up the stock..
In the future he is considering some to the following
A web cast shareholder meeting. Most likely just after the ¼ reports to help guys like me understand what the report means..
A video blog weekly to help keep us all abreast of what is up.
(I suggested that to Ron he seemed to like that idea)
#2 Why wasn't the recent departure of two top DDI executives publicly announced?
Understand this , Ron told me these men are great friends
There was no PR because the men were not top executives and
most important maybe a PR could of hurt their chance of future employment.
( I got the impression that the last was more important to Ron
ie their future and reputation)
#3 We can see from the cameras that things are quite busy in Houston, is most of this work going to existing clients or has Deep Down seen an increase in new inquiries from different (new)companies? Both New and Existing customers
And no the welders are not doing side jobs.
From what I understand as DPDW is growing so is their reputation and so are the opportunities for new customers...(They hedged on this as I think they are not allowed to say we are talking to so and so about this and that in the future back to the not pumping the stock, so I left it alone, But when I asked I got the feeling from the body language and the gleam in Ron's eye there are things afoot.
#4 You just bought a ROV why? What are your intentions are they needed ?do your client want them? We bought the ROV and plan on getting more as we can it is our intentions to have a ROV and crew on every rig in the gulf.
He seemed very excited about this it appeared to me that there is a need for this from clients and Ron has hired the right person to make this happen.
Ron got to talking about the ROVs and this is what I understand,
The ROVs are smaller than most in the industry for the expressed reason of being able to get into tight spots safely. He also said they have several tools on board and in use
that make the jobs quicker better and safer. And many of the designs were the brain child of his. Plus, the need is increasing a lot.
#5 What is the strategy behind having a privately held limited liability corp. for overseas acquisitions or securities TIA is useful for international jobs and contracts, but would say no more.
#6 Acquisitions, Tell me about the Electrowave, Mako, Flotation tech.
Why buy them can't Deep Down stand on it's own?
Ron said “brwtrpilot” you work on the water so you know how you learn to trust and respect those you work with over the years right?
So the men who own these firms are great friends who I have known for a lot of years.
Now you have to understand that Deep Down is a Service oriented company.
Each project is it own unique entity and over the years I saw what was needed to make a Job happen so I approached my friends and we have united our efforts under the Deep Down name. This allows DPDW the ability to streamline operations , in turn
this saves our client time and money, it has created a knowledge base that combines years of service in one of the world's most dangerous and demanding fields -- deep water operations. With this knowledge base and experience we and the firms that have been acquired, are working Safer and more proficient than they could as stand alone firms.
#6a is the company actively looking into another acquisition in any way at the moment? Just in general is the company "open" for this at present?" Always, but not in any hurry . It would have to complement Deep Down core (service).
#7 Does management really think that they deserve the large pay raises (bonus) that they are giving themselves considering the losses they created.. yes, Steve got a bit defensive, saying DPDW would be nothing without Ron, Gene, and Robert claiming they could easily go to work for more $ consulting at any other larger oil co,s (Houston has many)(Things got a little quiet but then Steve pulled out the 10-K and showed me
how if indeed there was not so many “one time write off charges this time” that they would indeed have made a profit.. and it is Gene who got the debt and bills out of the way so they could have a fighting chance in this economic environment..
I floated the idea that maybe they should tie their bonus to actual profit in a percent form. (Get this Ron wrote it down so maybe that will be something we see in the future.)
#8 Where is Deep Down headed your stock price bites right now what do you see for the future.
Steve pulled out a couple of independent research report excerpts one from Douglas Westwood
The World Deepwater Market Report 2009-2013 He then showed me updated information in the report that take into account the current world market... and industry wide it looks like 27 Billion yearly to be spent that includes exploration and production.
(I'm like, Steve that is all well and good but what about Deep Down how about our sub-sector?)
So he broke it down a little further for me.. and shows me a chart and on that chart there is a thing called a tree. Now this tree is not made by Deep Down but all of the stuff we make hooks into the tree.. now the award of the trees show an continued uptrend.
(look for the graph from Quest offshore Resources below)
But the Forcast spending for 2009 -2014 according to above for world subsea capital expenditures is (drumroll) $81.1 billion..
So there you go for the questions. I am sure I forgot stuff and I hope others will take the time to visit them..
One person wrote me before I went down and said have a good time look at their body language get a feel for them and let us know what you think..
So here you go when I first walked into the office it had a air of professionalism ,from the shy lady at the reception desk to the accountant and engineer and other staff working. When I first saw Ron and spoke to him I said to myself this is a man who
has a heart. One who is making his dream come true, a man not scared to get his hands dirty to make sure a job is done and done right.. Note, one of the things he loves to do
is go to the shop and design and weld new ideas. He is a builder and a thinker.
I feel he is really disgusted with the SEC and really heartbroken about the whole S-1 deal.
I get the impression that he is hurt by the loss his investors have incurred in the last few months..
But he does not strike me as the type of man who is going to lay down and cry uncle.. I think he is ready to fight to make “his child” grow.
And in fighting to make his child grow he is going to make this company a lot of money .
He has a strong handshake and looks a person in the eye when speaking.
If I was not writing I would say he is no..( ) you can add your own word there.
Steve showed his self to be articulate, patient, and intelligent.
He could get a 6 figure job in Houston any time he chose and has had the offers but he knows where Deep Down is headed and has cast his lot with them.
I did not get time to sit down with Gene but from his history taking a cash flow negative company and turning it into about a 2 Billion dollar a year business says a whole lot..
Note he does not need this job. He can afford not to work according to Ron and Steve,
But he has chosen to help build Deep Down..
So there you go folks that was my trip and impression...
What did I get from Deep Down besides information and a soda..
#1 a T-Shirt that says Deep Down gray in color
#2 A coffee Mug that says Deep Down
#3 Dinner paid for by Steve (thanks Steve nice chow)
That is it.
No stock, no money, just a infusion of knowledge that will pay off in the long run.
Hope this little trip to the Main Office of Deep Down help you all either make a few dollars or saves you a few depending on how you invest..
And I will say it again I am in No way a investment advisor. Or Stock Guru
I am just a run of the mill working class man who is trying to make a future for my family.
Good luck to all of you Brwtrpilot
