On Friday, DPDW stock surged above the 50-day moving average and tried also to touch the 200-day moving average at $0.079. This could not happen, but the total increase during the day was 23.06% and the share price closed the market at $0.0699. The trading volume of 3.71 million shares was almost 15 times the average and the highest since months.
According to the filed on Friday 10-Q, the revenues of Deep Down keep growing this year and the company has a positive $4.7 million cash flow from operations in the nine months ended this September. Though, due to the changed market conditions, the company had to reduce the book value of two of its reporting units by $4.5 million, which made the operating expenses and the operating loss look doubled from the same period last year.
Deep Down also has a problem with its debts and had at the end of September working capital deficit of over half a million dollars. One of the credit agreements has been amended so that the amount is now due in April next year. The company does not have enough cash to repay it and respectively management has to seek additional debt or equity capital prior to expiration.
Moreover, DPDW has one more pending transaction for which it lacks the cash. In May this year, a Share Purchase Agreement to acquire all the shares of the Massachusetts company Cuming Corporation for a price of $47 million was announced. This month, the period in which the agreement may be terminated has been extended again and management plan is to refinance the above mentioned loan “in conjunction with obtaining financing to consummate the purchase of Cuming Corporation”.
