2. RESTATEMENT OF QUARTERLY INFORMATION (UNAUDITED)

3 Months Ended

Mar. 31, 2016

Restatement of Prior Year Income [Abstract]

RESTATEMENT OF QUARTERLY INFORMATION (UNAUDITED)

In December 2014, at the request of a customer, we delivered a carousel to the customer on a lease or purchase arrangement. We honored this request in order to support its requirement for a critical umbilical project. At the completion of our customer’s requirement, we were advised by the customer it was not going to purchase the carousel, so we picked up the carousel and returned it to our facility. We then invoiced the customer on a rental basis.

The customer has declined to pay the invoices. We are pursuing collection through arbitration.

Under SEC Staff Accounting Bulletin No. 101 – Revenue Recognition in Financial Statements (SAB 101), “revenue should not be recognized until it is realized or realizable and earned.” Also according to SAB 101, revenue generally is realized or realizable and earned when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller's price to the buyer is fixed or determinable, and collectability is reasonably assured.

Based on the facts above and the guidelines of SAB 101, we determined that the revenue in relation to this situation should not have been recognized in the quarter ended March 31, 2015. As a result, we have reversed the misstated revenue and related receivable from our unaudited consolidated financial statements.

The following table summarizes the impact of the revenue reversal on our unaudited consolidated statement of operations:

Consolidated Statement of Operations impact:
	Three Months Ended
	March 31, 2015
	As Reported			Revenue Adjustment			As Restated
Revenues		6,839			(1,005	)		5,834
Gross profit		2,235			(1,005	)		1,230
Operating (loss) income		(230	)		(1,005	)		(1,235	)
Income (loss) before income taxes		(291	)		(1,005	)		(1,296	)
Net income (loss)		(297	)		(1,005	)		(1,302	)
Net income (loss) per share:
Basic earnings (loss) per common share		(0.02	)		(0.07	)		(0.09	)
Diluted earnings (loss) per common share		(0.02	)		(0.07	)		(0.09	)