Koil Energy Solutions Inc. (KLNG)

[spec machine]

Deep Down Announces First Quarter Results





HOUSTON, May 14 /PRNewswire-FirstCall/ -- Deep Down, Inc. (OTC Bulletin Board: DPDW) announced today unaudited results for the first quarter ended March 31, 2009.

Revenues for the first quarter of 2009 were $7,102,589, compared to $6,279,465 for the first quarter of 2008, for a 13.1% increase. The increase in revenues included $2.6 million from the acquisition of Flotation Technologies. Net loss for the first quarter ended March 31, 2009, was $729,775 as compared to a net loss of $89,477 for the same period of 2008. The first quarter loss included a net loss from Flotation Technologies of approximately $300,000.

Ron Smith, President and Chief Executive Officer stated "Historically, the first quarter is our weakest operating quarter; however, our operations as a whole have been naturally affected by the economic slowdown and falling oil and gas prices. We are fortunate to be in the deepwater sector of the industry, which is currently the strongest sector. We have recently announced several new contracts that are commencing this year, and are beginning work on our large riser buoyancy contract for delivery in the first quarter of 2010. We continue to expect growth in our operations for the balance of the year."

"The Company's financial condition continues to be strong," commented Eugene L. Butler, Chief Financial Officer. "With all of the Company's recent acquisitions and the significant growth we have experienced, we are now implementing a new Enterprise, Resource, and Planning (ERP) system to strengthen and improve our internal controls, consolidate our accounting systems, and streamline our service, manufacturing, and operating processes."

About Deep Down, Inc.

Deep Down, Inc. is an oilfield services company serving the worldwide offshore exploration and production industry. Deep Down's proven services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, distributed and drill riser buoyancy, ROVs and ROV tooling, as well as marine vessel automation, control, and ballast systems. Deep Down supports subsea engineering, installation, commissioning, and maintenance projects through specialized, highly experienced service teams and engineered technological solutions. The company's primary focus is on more complex deepwater and ultra-deepwater oil production distribution system support services and technologies, used between the platform and the wellhead. Deep Down provides these services through its four subsidiaries. More information about Deep Down is available at http://www.deepdowncorp.com/, by contacting the company at [phone], or .

One of our most important responsibilities is to communicate with shareholders in an open and direct manner. Comments are based on current management expectations, and are considered "forward-looking statements," generally preceded by words such as "plans," "expects," "believes," "anticipates," or "intends." We cannot promise future returns. Our statements reflect our best judgment at the time they are issued, and we disclaim any obligation to update or alter forward-looking statements as the result of new information or future events. Deep Down urges investors to review the risks and uncertainties contained within its filings with the Securities and Exchange Commission.

DEEP DOWN, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

March 31, December 31, 2009 2008 ASSETS Cash and cash equivalents $6,260,939 $2,495,464 Restricted cash 135,855 135,855 Accounts receivable, net 6,422,509 10,772,097 Prepaid expenses and other current assets 663,342 633,868 Inventory 993,545 1,224,170 Costs and estimated earnings in excess of billings on uncompleted contracts 165,454 707,737 Work in progress 78,007 137,940 Deferred tax asset 1,683,806 216,900 Total current assets 16,403,457 16,324,031 Property and equipment, net 14,806,223 13,799,196 Other assets, net (see Related Party Note 10) 928,453 457,836 Intangibles, net 17,763,529 18,090,680 Goodwill 15,024,300 15,024,300 Total assets $64,925,962 $63,696,043

LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued liabilities $3,522,510 $4,318,394 Billings in excess of costs and estimated earnings on uncompleted contracts 2,128,356 2,315,043 Current portion of long-term debt 471,015 382,912 Total current liabilities 6,121,881 7,016,349 Long-term debt 3,358,435 1,718,475 Deferred tax liabilities 2,310,728 1,125,945 Total liabilities 11,791,044 9,860,769

Stockholders' equity: Common stock, $0.001 par value, 490,000,000 shares authorized, 179,700,630 and 177,350,630 shares issued and outstanding, respectively 179,701 177,351 Additional paid-in capital 60,355,193 60,328,124 Accumulated deficit (7,399,976) (6,670,201) Total stockholders' equity 53,134,918 53,835,274 Total liabilities and stockholders' equity $64,925,962 $63,696,043

DEEP DOWN, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

For the Three Months Ended March 31, 2009 2008 Revenues $7,102,589 $6,279,465 Cost of sales 4,798,788 3,931,555 Gross profit 2,303,801 2,347,910 Operating expenses: Selling, general & administrative 2,843,776 1,879,409 Depreciation and amortization 406,097 125,803 Total operating expenses 3,249,873 2,005,212 Operating income (loss) (946,072) 342,698 Other income (expense): Interest income 2,228 39,164 Interest expense (48,344) (769,030) Other (expense) income (2,910) 28,355 Total other expense (49,026) (701,511) Loss before income taxes (995,098) (358,813) Benefit from income taxes 265,323 269,366 Net loss $(729,775) $(89,447)

Loss per share: Basic $- $- Weighted-average common shares outstanding 176,150,630 87,185,242

Diluted $- $- Weighted-average common shares outstanding 176,150,630 87,185,242

DEEP DOWN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Three Months Ended March 31, 2009 2008 Cash flows from operating activities:

Net loss $(729,775) $(89,447) Adjustments to reconcile net income to net cash used in operating activities: Non-cash amortization of debt discount - 231,760 Non-cash amortization of deferred financing costs - 56,915 Share-based compensation 29,419 105,162 Bad debt expense 60,000 3,949 Depreciation and amortization 751,276 298,150 Loss on disposal of equipment (3,038) 58,115 Deferred taxes payable (282,123) - Changes in assets and liabilities: Accounts receivable 4,289,588 (282,869) Prepaid expenses and other current assets (30,091) (107,239) Inventory 230,625 -

Costs and estimated earnings in excess of billings on uncompleted contracts 542,283 - Work in progress 59,933 (161,279) Accounts payable and accrued liabilities (795,884) (603,631)

Billings in excess of costs and estimated earnings on uncompleted contracts (186,687) (53,030) Net cash provided by (used in) operating activities $3,935,526 $(543,444) Cash flows used in investing activities: Cash paid for acquisition of Mako - (2,979,192) Purchases of equipment (1,428,114) (156,958) Deposits, related party (470,000) - Restricted cash - (187,500) Net cash used in investing activities $(1,898,114) $(3,323,650) Cash flows from financing activities: Proceeds from sales-type lease - 103,500 Borrowings on long-term debt 1,840,000 5,600,000 Payments of long-term debt (111,937) (926,808) Net cash provided by financing activities $1,728,063 $4,776,692 Change in cash and equivalents 3,765,475 909,598 Cash and cash equivalents, beginning of period 2,495,464 2,206,220 Cash and cash equivalents, end of period $6,260,939 $3,115,818

DATASOURCE: Deep Down, Inc.


CONTACT: Steven Haag, Investor Relations of Deep Down, Inc.,

[phone],


Web Site: http://www.deepdowninc.com/