**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**


**_______________________**





**FORM
      10-QSB**





**[
      X ] QUARTERLY REPORT
      PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES** **EXCHANGE
      ACT OF 1934**





**For
      the quarterly period ended March 31, 2007; or**





**[  
       ] TRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES** **EXCHANGE
      ACT OF 1934**





**Commission
      File No. 333-100137**




**DEEP
      DOWN, INC.**


**(Exact
      name of registrant as specified in its charter)**




Nevada
            
            75-2263732(State
                of other jurisdiction of incorporation)
            
            (I.R.S.
                Employer Identification No.)15473
                East Freeway
              Channelview,
                Texas
            
            77530(Address
                of Principal Executive Office)
            
            (Zip
                Code)





Registrant’s
      telephone number, including area code: **(281)
      862-2201**





Securities
      registered pursuant to Section 12 (b) of the Act: **NONE**





Securities
      registered pursuant to Section 12 (g) of the Act: **Common
      Stock $0.01 par value**





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
      (or
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirement for the past 90 days.
      Yes x No
      r




Check
      if
      there is no disclosures of delinquent filers in response to Item 405 of
      Regulations S-B not contained in this form, and no disclosure will be contained,
      to the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. r




Indicate
      by checkmark whether the registrant is a shell company (as defined in Rule
      12b-2
      of the Exchange Act). Yes r  No x





At
      May
      18, 2007, the issuer had outstanding 67,870,171 shares of Common Stock, par
      value $0.01 per share.




Transitional
      Small Business Disclosure Format: Yes r No
x











**DEEP
      DOWN, INC.**


**Report
      on Form 10-QSB**





**For
      the Quarter Ended March 31, 2007**





**INDEX**




**Page****PART
                I - FINANCIAL INFORMATION**
            **1****Item
                1. Financial Statements.**
            **2****Consolidated
                Balance Sheets (unaudited)**
            **2****Consolidated
                Statement of Operations (unaudited)**
            **3****Consolidated
                Statement of Cash Flows (unaudited)**
            **4****Notes**
            **5****Item
                2. Management's Discussion and Analysis**
            **11****Item
                3. Controls and Procedures**
            **15****PART
                II - OTHER INFORMATION**
            **16****Item
                1. Legal Proceedings.**
            **16****Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds**
            **16****Item
                3. Defaults Upon Senior Securities**
            **16****Item
                4. Submission of Matters to a Vote of Security
                Holders**
            **16****Item
                5. Other Information.**
            **16****Item
                6. Exhibits**
            **17****SIGNATURES**
            **17**








**PART
      I - FINANCIAL INFORMATION**




**Forward-Looking
      Information**




The
      statements contained in this Quarterly Report on Form 10-QSB that are not
      historical fact are forward-looking statements (as such term is defined in
      the
      Private Securities Litigation Reform Act of 1995), within the meaning of Section
      27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
      Exchange Act of 1934, as amended. The forward-looking statements contained
      herein are based on current expectations that involve a number of risks and
      uncertainties. These statements can be identified by the use of forward-looking
      terminology such as “believes,” “expects,” “may,” “will,” “should,” “intend,”
“plan,” “could,” “is likely,” or “anticipates,” or the negative thereof or other
      variations thereon or comparable terminology, or by discussions of strategy
      that
      involve risks and uncertainties. The Company wishes to caution the reader that
      these forward-looking statements that are not historical facts are only
      predictions. No assurances can be given that the future results indicated,
      whether expressed or implied, will be achieved. While sometimes presented with
      numerical specificity, these projections and other forward-looking statements
      are based upon a variety of assumptions relating to the business of the Company,
      which, although considered reasonable by the Company, may not be realized.
      Because of the number and range of assumptions underlying the Company’s
      projections and forward-looking statements, many of which are subject to
      significant uncertainties and contingencies that are beyond the reasonable
      control of the Company, some of the assumptions inevitably will not materialize,
      and unanticipated events and circumstances may occur subsequent to the date
      of
      this report. These forward-looking statements are based on current expectations
      and the Company assumes no obligation to update this information. Therefore,
      the
      actual experience of the Company and the results achieved during the period
      covered by any particular projections or forward-looking statements may differ
      substantially from those projected. Consequently, the inclusion of projections
      and other forward-looking statements should not be regarded as a representation
      by the Company or any other person that these estimates and projections will
      be
      realized, and actual results may vary materially. There can be no assurance
      that
      any of these expectations will be realized or that any of the forward-looking
      statements contained herein will prove to be accurate.




1


**Item
      1.Financial
      Statements.**




**Deep
                  Down, Inc.****Consolidated
                  Balance Sheets****(unaudited)****March
                  31,**
              
              **December
                  31,****2007**
              
              **2006****Assets**Cash
                  and equivalents
              
              $
              97,977
              
              $
              12,462Accounts
                  receivable
              
              
              1,445,448
              
              
              1,264,228Prepaid
                  expenses and other current assets
              
              
              11,377
              
              
              11,488Inventory
              
              
              130,487
              
              
              145,487Finished
                  goods
              
              
              355,568
              
              
              -Construction
                  in progress
              
              
              852,315
              
              
              916,485Total
                  current assets
              
              
              2,893,172
              
              
              2,350,150Property
                  and equipment, net
              
              
              1,596,548
              
              
              845,200Other
                  assets
              
              
              366,134
              
              
              -Goodwill
              
              
              6,934,213
              
              
              6,934,213Total
                  assets
              
              $
              11,790,067
              
              $
              10,129,563**Liabilities
                  and Stockholders' Equity**Accounts
                  payable and accrued liabilities
              
              $
              1,211,726
              
              $
              816,490Deferred
                  revenue
              
              
              262,000
              
              
              190,000Other
                  current liabilities
              
              
              261,068
              
              
              -Current
                  portion of long-term debt
              
              
              459,678
              
              
              410,731Total
                  current liabilities
              
              
              2,194,472
              
              
              1,417,221Long-term
                  debt
              
              
              1,120,541
              
              
              757,617Series
                  E redeemable exchangeable preferred stock, face value andliquidation
                  preference of $1,000 per share, no dividend preference,authorized
                  10,000,000 aggregate shares of all series of Preferred
                  stock8,000
                  and 5,000 issued and outstanding, respectively
              
              
              5,856,470
              
              
              3,486,376Series
                  G redeemable exchangeable preferred stock, face value andliquidation
                  preference of $1,000 per share, no dividend preference,authorized
                  10,000,000 aggregate shares of all series of Preferred
                  stock0
                  and 1,000 issued and outstanding, respectively
              
              
              -
              
              
              697,275Total
                  liabilities
              
              
              9,171,483
              
              
              6,358,489Commitments
                  and contingencies (Note 7)Temporary
                  equity:Series
                  D redeemable convertible preferred stock, $0.01 par value, face
                  value andliquidation
                  preference of $1,000 per share, no dividend preference,authorized
                  10,000,000 aggregate shares of all series of Preferred
                  stock5,000
                  issued and outstanding
              
              
              4,419,244
              
              
              4,419,244Series
                  F redeemable convertible preferred stock, $0.01 par value, face
                  value andliquidation
                  preference of $1,000 per share, no dividend preference,authorized
                  10,000,000 aggregate of all series of Preferred stock0
                  and 3,000 issued and outstanding, respectively
              
              
              -
              
              
              2,651,547Total
                  temporary equity
              
              
              4,419,244
              
              
              7,070,791Stockholders'
                  equity:Series
                  C convertible preferred stock, $0.001 par value, 7% cumulative
                  dividend,authorized
                  10,000,000 aggregate shares of all series of Preferred
                  stock22,000
                  shares issued and outstanding
              
              
              22
              
              
              22Stock
                  subscription receivable
              
              
              (10,000
              )
              
              -Common
                  stock, $0.01 par value, 490,000,000 shares authorized,
                  67,870,171and
                  82,870,171 shares issued and outstanding, respectively
              
              
              678,702
              
              
              828,702Paid
                  in capital
              
              
              939,691
              
              
              (828,624
              )Retained
                  earnings
              
              
              (3,409,075
              )
              
              (3,299,817
              )Total
                  stockholders' equity
              
              
              (1,800,660
              )
              
              (3,299,717
              )Total
                  liabilities and stockholders' equity
              
              $
              11,790,067
              
              $
              10,129,563See
                  accompanying notes to unaudited consolidated financial
                  statements.


2


**Deep
                Down, Inc.****Consolidated
                Statement of Operations****For
                the Three Months Ended March 31, 2007****(unaudited)**Revenues
            
            $
            2,098,394Cost
                of sales
            
            
            1,252,089Gross
                profit
            
            
            846,305Operating
                expenses:Selling,
                general & administrative
            
            
            659,651Depreciation
            
            
            64,025Total
                operating expenses
            
            
            723,676Operating
                income
            
            
            122,629Other
                income (expense):Interest
                expense
            
            
            (231,887
            )Total
                other income (expense)
            
            
            (231,887
            )Loss from
                continuing operations
            
            
            (109,258
            )Income
                tax provision
            
            
            -Net
                loss
            
            $
            (109,258
            )Net
                loss per share:Basic
                and diluted
            
            $
            (0.00
            )Weighted
                average common shares outstandingBasic
                and diluted
            
            
            81,036,838See
                accompanying notes to unaudited consolidated financial
                statements.




3


**Deep
                Down, Inc.****Consolidated
                Statement of Cash Flows****For
                the Three Months Ended March 31, 2007****(unaudited)**Cash
                flows from operating activities:Net
                loss
            
            $
            (109,258
            )Adjustments
                to reconcile net loss to net cashprovided
                by operating activities:Depreciation
            
            
            64,025Amortization
                of debt discount
            
            
            179,587Changes
                in assets and liabilities:Accounts
                receivable
            
            
            (181,220
            )Prepaid
                expenses and other current assets
            
            
            111Inventory
            
            
            15,000Finished
                goods
            
            
            (355,568
            )Construction
                in progress
            
            
            64,170Accounts
                payable and accrued liabilities
            
            
            395,236Deferred
                revenue
            
            
            72,000Net
                cash provided by operating activities
            
            
            144,083Cash
                flows from investing activities:Cash
                paid for third party debt
            
            
            (366,134
            )Cash
                received from factoring of ElectroWave receivables
            
            
            261,068Purchases
                of equipment
            
            
            (290,373
            )Net
                cash used in investing activities
            
            
            (395,439
            )Cash
                flows from financing activities:Proceeds
                from sale of common stock, net of expenses
            
            
            950,000Payments
                of long-term debt
            
            
            (113,129
            )Payment
                for cancellation of common stock
            
            
            (250,000
            )Redemption
                of preferred stock
            
            
            (250,000
            )Net
                cash provided by financing activities
            
            
            336,871Change
                in cash and equivalents
            
            
            85,515Cash
                and equivalents, beginning of year
            
            
            12,462Cash
                and equivalents, end of year
            
            $
            97,977Supplemental
                Disclosures:Cash
                paid for interest
            
            $
            52,301Supplemental
                schedule of noncash investingand
                financing activities:Fixed
                assets purchased with capital lease
            
            $
            525,000Exchange
                of preferred stock
            
            $
            3,366,778See
                accompanying notes to unaudited consolidated financial
                statements.




4





DEEP
      DOWN, INC. AND SUBSIDIARIES


NOTES
      TO
      UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS





**Note
      1: Description of Business**





Deep
      Down, Inc, (“the Company”) a Nevada corporation, provides installation
      management, engineering services, support services and storage management
      services for the subsea controls, umbilicals & pipeline industries offshore.
      The Company also fabricates component parts for subsea distribution systems
      and
      assemblies.





On
      June
      29, 2006, Subsea Acquisition Corporation (“Subsea”) was formed with the intent
      to acquire service providers to the offshore industry, and designers and
      manufacturers of subsea equipment, surface equipment and offshore rig equipment
      that are used by major integrated, large independent and foreign national oil
      and gas companies in offshore areas throughout the world. On November 21, 2006,
      Subsea acquired Deep Down, Inc, a Delaware corporation founded in 1997. Under
      the terms of this transaction, all of Deep Down, Inc.’s shareholders transferred
      ownership of all of Deep Down, Inc.’s common stock to Subsea in exchange for
      5,000 shares of Subsea’s Series D Preferred Stock and 5,000 shares of Subsea’s
      Series E Preferred Stock resulting in Deep Down, Inc. becoming a wholly owned
      subsidiary of Subsea. On the same day, Subsea then merged with Deep Down, with
      the surviving company operating as Deep Down, Inc. The purchase price based
      on
      the fair value of the Series D and E Preferred stock was $7,865,471. This
      transaction was accounted for as a purchase, with Subsea being the acquirer
      based on the change in voting control. The acquisition price was allocated
      to
      the assets acquired and liabilities assumed based upon their estimated fair
      values with the excess being recorded as goodwill. The allocation of the
      purchase price was based upon preliminary valuations. Estimates and assumptions
      are subject to change upon the receipt and management’s review of the final
      valuations and final tax returns. The final valuation of net assets is expected
      to be completed no later than one year from the acquisition date and any future
      changes in the value of net assets will be offset by a corresponding change
      in
      goodwill.





All
      accounts of the Company and its wholly owned subsidiaries are included in the
      consolidated financial statements for the appropriate periods. All significant
      inter-company transactions and accounts have been eliminated in consolidation.
      Since the Company was formed on June 29, 2006, comparative financial statements
      are not presented.





The
      accompanying unaudited financial statements as of March 31, 2007 and for the
      three months then ended have been prepared in accordance with generally accepted
      accounting principles for interim financial information. Accordingly, they
      do
      not include all of the information and footnotes required by generally accepted
      accounting principles for audited financial statements. In the opinion of the
      Company’s management, the interim information includes all adjustments,
      consisting only of normal recurring adjustments, necessary for a fair
      presentation of the results for the interim periods. The footnote disclosures
      related to the interim financial information included herein are also unaudited.
      Such financial information should be read in conjunction with the consolidated
      financial statements and related notes thereto as of December 31, 2006 and
      for
      the year then ended included in the Company’s annual report on Form 10-KSB/A for
      the fiscal year ended December 31, 2006.





The
      preparation of financial statements in accordance with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amount of assets and liabilities at the date of the
      financial statements and the reported amount of revenues and expenses during
      the
      reporting period. Significant estimates and assumptions have been used by
      management in conjunction with the estimated useful lives of fixed assets and
      the valuation of preferred stock. Actual results could differ from these
      estimates. Certain prior period amounts have been revised to conform to the
      current period presentation.





5


DEEP
      DOWN, INC. AND SUBSIDIARIES


NOTES
      TO
      UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




**Note
      2: Accounts Receivable**





Accounts
      receivable includes an allowance for uncollectible accounts of $81,809 as of
      March 31, 2007. Bad debt expense totaled $1,858 for the three months ended
      March
      31, 2007.





The
      Company factors most of its accounts receivables with a bank. Under the terms
      of
      the arrangement, the Company receives proceeds equal to 80% of the value of
      the
      receivable at the date of transfer. Upon collection of the receivable, the
      bank
      remits the remaining 20%, less fees and interest. Fees range from 0.25% to
      2%
      depending on the age of the receivable and interest is prime plus 2%. The
      arrangement contains provisions that indicate the Company is responsible for
      up
      to 20% of end-user customer payment defaults on factored receivables.





**Note
      3: Property and Equipment**





Property
      and equipment consisted of the following as of March 31, 2007:




March
                  31, 2007Building
              
              $
              50,226Furniture
                  and fixtures
              
              
              11,806Vehicles
                  and trailers
              
              
              66,662Equipment
              
              
              1,559,040Total
              
              
              1,687,734Less:
                  Accumulated depreciation
              
              
              (91,186
              )Property
                  and equipment, net
              
              $
              1,596,548





In
      February 2007, the Company entered into a capital lease transaction for the
      lease of a 100-ton Shuttlelift Crane valued at $525,000, which is included
      with
      Equipment above. See Notes 4 and 7. This transaction is reflected on the
      Statement of Cash Flows on the supplemental schedule of non-cash
      transactions.





**Note
      4: Long-Term Debt**





At
      March
      31, 2007 long-term debt consisted of the following:




**March
                  31, 2007**Note
                  payable with a bank, monthly principal andinterest
                  payments, interest fixed at 7.5%,due
                  September 2008; secured by equipmentunder
                  lease contract to a third party
              
              $
              379,540Note
                  payable with a bank, monthly principal andinterest
                  payments, interest fixed at 7.5%,due
                  November 2010; secured by machinery,equipment,
                  furniture and fixtures
              
              
              688,919Total
                  bank loans
              
              
              1,068,459Capital
                  lease of equipment, monthly lease payments,interest
                  imputed at 11.2%
              
              
              511,760Total
                  long-term debt
              
              
              1,580,219Current
                  portion of long-term debt
              
              
              (459,678
              )Long-term
                  debt, net of current portion
              
              $
              1,120,541





6




DEEP
        DOWN, INC. AND SUBSIDIARIES
 NOTES
        TO
        UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


**Note
      4: Long-Term Debt (Continued)**





Under
      its
      long-term bank debt agreements, the Company is required to maintain certain
      financial covenants, including maintaining a current ratio in excess of 1 to
      1,
      debt service coverage in excess of 1.3 to 1, tangible net worth in excess of
      $850,000, and debt/net worth ratio less than 2 to 1, as each term is defined
      in
      the credit agreement. The Company is currently not in compliance with the
      debt/net worth ratio covenant but has obtained a waiver as of March 31,
      2007.





In
      February 2007, the Company purchased under a seller-financed capital lease
      a 100-ton Shuttlelift crane and related equipment for the Company's headquarters
      in Channelview, Texas. The equipment was delivered and placed into service
      in
      March, 2007. In accordance with Financial Accounting Standards Board SFAS 13
      “Accounting for Leases” as amended, the lease was capitalized and the lease
      obligation and related assets were recognized on the Company’s consolidated
      balance sheet. The total value of the lease payments discounted at a 11.2%
      interest rate, or $525,000, was capitalized and the offsetting lease obligation
      was recorded at February 28, 2007.





**Note
      5: Preferred Stock**





*Series
      E and G Classified as Liabilities*





The
      Series E and G redeemable exchangeable preferred stock have a face value and
      liquidation preference of $1,000 per share, no dividend preference, and are
      exchangeable at the holder’s option after June 30, 2007 into 6% Subordinated
      Notes due three years from the date of the exchange. These shares carry voting
      rights equal to 690 votes per share.





The
      Series E and G Preferred Stock were valued based on the discounted value
      of their expected future cash flows (using a discount rate of 20%). The
      Company evaluated Series E and G and has classified them as debt instruments
      at
      inception due to the fact that they are exchangeable into Notes or redeemable
      at
      the Company’s option.





The
      Company has been accreting the discount on Series E and G using the effective
      interest method from the date of issuance over the term of the Note. Interest
      expense related to the accretion of the discount totaled $179,587 for the three
      months ended March 31, 2007, which includes the immediate accretion of
      approximately $72,000 to accrete to face value the 250 shares of Preferred
      Series E stock that were redeemed during the quarter ended March 31,
      2007.





All
      Series G shares were cancelled and exchanged during the three months ended
      March
      31, 2007. Accordingly, there is no future discount accretion relating to the
      Series G shares. See “Series F and G Cancellation and Issuance of Additional
      Series E” below.





In
      February the Company redeemed 250 shares of Series E exchangeable preferred
      stock at the face value of $1,000 per share for a total of $250,000. The Company
      accreted the remaining discount attributable to such shares on the date of
      redemption.





At
      March
      31, 2007, the unamortized discount related to Series E preferred stock was
      $2,143,530.





*Series
      D and F Classified as Temporary Equity*





The
      Series D redeemable convertible preferred stock have a face value and
      liquidation preference of $1,000 per share, no dividend preference, and are
      convertible into shares of common stock determined by dividing the face amount
      by a conversion price of $0.1933. These shares carry voting rights equal to
      one
      vote for every share of common stock into which the preferred stock is
      convertible. These shares are redeemable at their face value on an annual basis
      within 120 days after each calendar year-end beginning with the year ending
      December 31, 2007 based on an amount equal to 15.625% of annual net income.
      In
      the event that a holder declines redemption, such amounts are reallocated to
      the
      other preferred stock holders that have elected to redeem.





The
      Series F redeemable convertible preferred stock have a face value and
      liquidation preference of $1,000 per share, no dividend preference, and are
      convertible into shares of common stock determined by dividing the face amount
      by a conversion price of $0.1933. These shares carry voting rights equal to
      one
      vote for every share of common stock into which the preferred stock is
      convertible. These shares are redeemable at their face value on an annual basis
      within 120 days after each calendar year-end beginning with the year ending
      December 31, 2007 based on an amount equal to 9.375% of annual net income.
      All
      Series F shares were cancelled and exchanged for Series E shares during the
      three months ended March 31, 2007.




7
 
  DEEP
          DOWN, INC. AND SUBSIDIARIES
 NOTES
          TO
          UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  As
            the
            Series D and F Preferred Stock function as debt instruments with an embedded
            option, the Company valued the instruments based on the discounted value
            of their expected future cash flows (using a discount rate of 20%)
            attributable to the redemption feature plus the value of the embedded
            option using the Black Scholes option pricing model with the following
            assumptions - exercise price $0.1933, stock price $0.10, volatility 200%,
            risk
            free rate 5%. The Company evaluated Series D and F for liability or equity
            presentation and determined that the instruments were more appropriately
            classified as temporary equity due to the conditionality of the instruments,
            as
            events triggering the redemption or conversion were uncertain at
            inception.


*Series
      F and G Cancellation and Issuance of Additional Series E*





On
      March
      20, 2007 the Company finalized the terms of an agreement with Daniel L. Ritz,
      Jr. (shareholder and director), who agreed to surrender 25,000,000 shares of
      common stock for $250,000 in cash (par value). The market value of those shares
      was $7,250,000. Additionally, he surrendered 1,500 shares of Series F
      convertible preferred stock with a value of $1,325,773 and 500 shares of Series
      G exchangeable preferred stock with a value of $357,615 to the Company for
      cancellation in exchange for 1,250 shares of Series E exchangeable preferred
      stock valued at $945,563. The Series E Preferred Stock was valued based on
      the
      discounted value of its expected future cash flows (using a discount rate of
      20%).  The difference between the values of the preferred shares
      surrendered and the newly issued was $737,826 which is reflected in paid in
      capital on the accompanying consolidated balance sheet. In addition, Mr. Ritz
      also kept 500 shares of Series E exchangeable preferred stock he previously
      owned and agreed to tender his resignation from the Board.





On
      March
      20, 2007 the Company issued 2,000 shares of Series E exchangeable preferred
      stock to John C. Siedhoff (Chief Financial Officer, and director) valued at
      $1,512,901 for the surrender of his ownership of 1,500 shares of Series F
      convertible preferred stock valued at $1,325,773 and 500 shares of Series G
      exchangeable preferred stock valued at $357,616, which were returned to the
      transfer agent for cancellation. The Series E Preferred Stock was valued based
      on the discounted value of its expected future cash flows (using a discount
      rate
      of 20%).  The difference between the values of the surrendered shares and
      the newly issued was $170,489 which is reflected in paid in capital on the
      accompanying consolidated balance sheet.




**Note
      6: Common Stock**





*Private
      Placement*




On
      March
      20, 2007, the Company completed the sale of 10,000,000 shares of common stock
      in
      a private placement for $1,000,000. At March 31, 2007, $10,000 was in
      transit and subsequently received April 2, 2007; the Company has
      recorded a stock subscription receivable. A total of 1,025,000 shares were
      purchased by the Chief Executive Officer, and director and his wife, a
      Vice-President of the Company. The shares are restricted as defined in Rule
      144
      of the Securities Act of 1933 and contain a restrictive legend, which restricts
      the ability of the holders to sell these shares for a period of no less than
      one
      year. Funds will be used to redeem certain outstanding exchangeable preferred
      stock and for working capital.





8




DEEP
      DOWN, INC. AND SUBSIDIARIES


NOTES
      TO
      UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


**Note
      7: Commitments and Contingencies**





*Litigation*





The
      Company is from time to time involved in legal proceedings arising in the normal
      course of business. As of the date of this report, there are no pending or
      threatened legal proceedings.




*Operating
      Leases*





The
      Company leases land and buildings under two noncancelable operating leases
      and
      is responsible for the related maintenance, insurance and property taxes. One
      of
      these leases is with a company that is wholly owned by the Chief Executive
      Officer and director and his wife, a Vice President. This lease calls for 60
      monthly payments of $11,000 and began as of September, 2006.





*Capital
      Lease*





The
      Company leases a 100-ton Shuttlelift Crane under a noncancelable capital lease
      and is responsible for the related maintenance, insurance and property taxes.
      The terms of the lease require the Company to make 84 monthly payments of
      $8,035.69 including sales tax beginning March 10, 2007. See additional
      discussion in Note 4.




**Note
      8: Fair Value of Financial Instruments**





The
      estimated fair value of the Company’s financial instruments is as follows at
      March 31, 2007:





·
            Cash
                and equivalents, accounts receivable and accounts payable - The carrying
                amounts approximated fair value due to the short-term maturity of
                these
                instruments.


·
            Preferred
                Stock - Series D and E - The carrying amounts approximate the fair
                value
                given the limited time the instruments have been
                outstanding.


·
            Long-term
                debt - The fair value closely approximates the carrying value of
                the
                Company’s debt instruments.




**Note
      9:** **Recent
      Accounting Pronouncements**





In
      July
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes (FIN 48) - an interpretation of FASB Statement No. 109, Accounting
      for Income Taxes (SFAS No. 109)” (FIN 48). FIN 48 clarifies the accounting for
      uncertainty in income taxes recognized in accordance with SFAS No. 109 and
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a return. Guidance is also provided on de-recognition, classification,
      interest and penalties, accounting in interim periods, disclosure and
      transition. FIN 48 is effective for fiscal years beginning after December 15,
      2006. The effect of adoption of FIN 48 did not have a material impact on the
      Company’s consolidated financial statements.





In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements” (SFAS
      157). SFAS 157 defines fair value, establishes a framework for measuring fair
      value and expands disclosures about fair value measurements. Where applicable,
      SFAS 157 clarifies and codifies related guidance within other generally accepted
      accounting principles. SFAS 157 is effective for fiscal years beginning after
      November 15, 2007. The effect of adoption of SFAS 157 is not anticipated to
      have
      a material impact on the Company’s consolidated financial
      statements.




9




DEEP
      DOWN, INC. AND SUBSIDIARIES


NOTES
      TO
      UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


**Note
      10: Subsequent Events**





On
      April
      2, 2007, the Company consummated an Asset Purchase Agreement with ElectroWave
      USA, Inc. (“ElectroWave”) a Texas corporation, that provided for the acquisition
      of substantially all of the assets of ElectroWave. The Company formed a
      wholly-owned subsidiary, ElectroWave USA, Inc., a Nevada corporation, to
      complete the acquisition. ElectroWave offers products and services in the fields
      of electronic monitoring and control systems for the energy, military, and
      commercial business sectors.





The
      purchase price, subject to a working capital adjustment, is approximately
      $172,500 and includes the payment of bank and other debts of ElectroWave
      and the assumption of leases of real and personal property and ongoing accounts
      payable in exchange for substantially all of the assets, including inventory,
      fixed assets and accounts receivable and the transfer of all employees. Prior
      to
      the date of acquisition, the Company paid $432,474 to three creditors of
      ElectroWave. Such amounts are included as $366,134 of other assets, and $66,340
      of construction in progress on the accompanying balance sheet. Similarly,
      the Company received approximately $260,000 of proceeds from the factoring
      of
      Electrowave’s receivables, which is reflected in other current liabilities in
      the accompanying balance sheet. All of these amounts will be included as part
      of
      the acquisition price when applying purchase accounting to the
      transaction.




In
      addition, the Company may issue up to an aggregate of 517 shares of convertible
      preferred stock over the next three years, as an additional contingent purchase
      cost, if the operations of ElectroWave reach certain financial milestones based
      on net income for the fiscal years ending December 31, 2007, 2008 and 2009.





On
      May
      17, 2007, the Company accepted John C. Siedhoff's resignation from the
      board of directors and his resignation as Chief Financial Officer, effecive
      April 30, 2007.




10




**Item
      2.** **Management's
      Discussion and Analysis or Plan of Operation**





*The
      following plan of operation discussion and analysis provides information that
      management believes is relevant for an assessment and understanding of our
      plans
      and financial condition.  The following selected financial information is
      derived from our historical financial statements and should be read in
      conjunction with such financial statements and notes thereto set forth elsewhere
      herein and the “Forward-Looking Statements” explanation included herein. This
      information should also be read in conjunction with our audited historical
      consolidated financial statements which are included in our Form 10-KSB/A for
      the fiscal year ended December 31, 2006 filed with the Securities and Exchange
      Commission on April 24, 2007.*





**Corporate
      History**





Deep
      Down, Inc, (“the Company”) a Nevada corporation, provides installation
      management, engineering services, support services and storage management
      services for the subsea controls, umbilicals & pipeline industries offshore.
      The Company also fabricates component parts for subsea distribution systems
      and
      assemblies.





On
      June
      29, 2006, Subsea Acquisition Corporation (“Subsea”) was formed with the intent
      to acquire service providers to the offshore industry, and designers and
      manufacturers of subsea equipment, surface equipment and offshore rig equipment
      that are used by major integrated, large independent and foreign national oil
      and gas companies in offshore areas throughout the world. On November 21, 2006,
      Subsea acquired Deep Down, Inc, a Delaware corporation founded in 1997. Under
      the terms of this transaction, all of Deep Down, Inc.’s shareholders transferred
      ownership of all of Deep Down Inc.’s common stock to Subsea in exchange for
      5,000 shares of Subsea’s Series D Preferred Stock and 5,000 shares of Subsea’s
      Series E Preferred Stock resulting in Deep Down Inc. becoming a wholly owned
      subsidiary of Subsea. On the same day, Subsea then merged with Deep Down, with
      the surviving company operating as Deep Down Inc. The purchase price based
      on
      the fair value of the Series D and E Preferred stock was $7,865,471. This
      transaction was accounted for as a purchase, with Subsea being the acquirer
      based on the change in voting control. The acquisition price was allocated
      to
      the assets acquired and liabilities assumed based upon their estimated fair
      values with the excess being recorded as goodwill. The allocation of the
      purchase price was based upon preliminary valuations. Estimates and assumptions
      are subject to change upon the receipt and management’s review of the final
      valuations and final tax returns. The final valuation of net assets is expected
      to be completed no later than one year from the acquisition date and any future
      changes in the value of net assets will be offset by a corresponding change
      in
      goodwill.





**Recent
      Developments**





On
      April
      2, 2007, the Company consummated an Asset Purchase Agreement with ElectroWave
      USA, Inc. (“ElectroWave”) a Texas corporation, that provided for the acquisition
      of substantially all of the assets of ElectroWave. The Company formed a
      wholly-owned subsidiary, ElectroWave USA, Inc., a Nevada corporation, to
      complete the acquisition. ElectroWave offers products and services in the fields
      of electronic monitoring and control systems for the energy, military, and
      commercial business sectors.





The
      purchase price, subject to a working capital adjustment, is approximately
      $172,500 and includes the payment of bank and other debts of ElectroWave
      and the assumption of leases of real and personal property and ongoing accounts
      payable in exchange for substantially all of the assets, including inventory,
      fixed assets and accounts receivable and the transfer of all employees. Prior
      to
      the date of acquisition, the Company paid $432,474 to three creditors of
      ElectroWave, and received
      $261,068 of proceeds from the factoring of Electrowave’s receivables.




In
      addition, the Company may issue up to an aggregate of 517 shares of convertible
      preferred stock over the next three years, as an additional contingent purchase
      cost, if the operations of ElectroWave reach certain financial milestones based
      on net income for the fiscal years ending December 31, 2007, 2008 and 2009.




11


**Recent
      Sales of Unregistered Securities**




On
        March
        20, 2007, the Company completed the sale of 10,000,000 shares of common stock
        in
        a private placement for $1,000,000. At March 31, 2007, $10,000 was in
        transit and subsequently received April 2, 2007; the Company has
        recorded a stock subscription receivable. A total of 1,025,000 shares were
        purchased by the Chief Executive Officer, and director and his wife, a
        Vice-President of the Company. The shares are restricted as defined in Rule
        144
        of the Securities Act of 1933 and contain a restrictive legend, which restricts
        the ability of the holders to sell these shares for a period of no less than
        one
        year. Funds will be used to redeem certain outstanding exchangeable preferred
        stock and for working capital.




On
      March
      20, 2007 the Company finalized the terms of an agreement with Daniel L. Ritz,
      Jr. (shareholder and director), who agreed to surrender 25,000,000 shares of
      common stock for $250,000 in cash (par value). The market value of those shares
      was $7,250,000. Additionally, he surrendered 1,500 shares of Series F
      convertible preferred stock with a value of $1,325,773 and 500 shares of Series
      G exchangeable preferred stock with a value of $357,615 to the Company for
      cancellation in exchange for 1,250 shares of Series E exchangeable preferred
      stock valued at $945,563. The Series E Preferred Stock was valued based on
      the
      discounted value of its expected future cash flows (using a discount rate of
      20%).  The difference between the values of the preferred shares
      surrendered and the newly issued was $737,826 which is reflected in paid in
      capital on the accompanying consolidated balance sheet. In addition, Mr. Ritz
      also kept 500 shares of Series E exchangeable preferred stock he previously
      owned and agreed to tender his resignation from the Board. The Company has
      treated this as a modification of a share-based payment in accordance with
      the
      provisions of SFAS No. 123R, “Share-Based Payments”.





On
      March
      20, 2007 the Company issued 2,000 shares of Series E exchangeable preferred
      stock to John C. Siedhoff (Chief Financial Officer, and director) valued at
      $1,512,901 for the surrender of his ownership of 1,500 shares of Series F
      convertible preferred stock valued at $1,325,773 and 500 shares of Series G
      exchangeable preferred stock valued at $357,616, which were returned to the
      transfer agent for cancellation. The Series E Preferred Stock was valued based
      on the discounted value of its expected future cash flows (using a discount
      rate
      of 20%).  The difference between the values of the surrendered shares and
      the newly issued was $170,489 which is reflected in paid in capital on the
      accompanying consolidated balance sheet.




The
      offers and sales of the securities in the private placement are exempt from
      the
      registration requirements of the Securities Act of 1933 (the “Act”) pursuant to
      Rule 506 and Section 4(2) of the Act. In connection with the offers and sales,
      we did not conduct any general solicitation or advertising, and we complied
      with
      the requirements of Regulation D relating to the restrictions on the
      transferability of the shares issued.




**Executive
      Overview**




We
      are an
      installation engineering and management company focused on the offshore segment
      of the energy industry. We can custom design and manufacture product or modify
      existing equipment to meet customer specifications. We design, manufacture,
      fabricate, sell and service highly-engineered subsea equipment, surface
      equipment and offshore rig equipment for use in deepwater, harsh environment
      and
      severe service applications. Our principal products consist of flying lead
      installation, maintenance and termination systems; buoyancy and rigging systems;
      high and low pressure testing and monitoring systems; latch systems; lay chutes;
      rollers; tensioners; and offshore storage and space management systems. We
      also
      provide installation, retrieval, storage and management services in connection
      with the use of our products.




Deep
      Down
      has developed its broad line of subsea equipment, surface equipment and offshore
      rig equipment primarily through internal product development efforts in
      Channelview, Texas. In many cases, these products were developed in direct
      response to customer requests for solutions to critical problems in the field.
      We are instrumental in achieving solutions for our clients to simplify
      installation procedures and reduce costs.




12




Our
      new
      product line of Launch and Recovery Systems (LARS) have started shipping to
      our
      customers, including a Saturation Diving LARS, a Sea-eye LARS and a 3,000 meter
      rated LARS. We are currently manufacturing two (2) 4,000 meter rated LARS for
      extreme water depths and geophysical installation equipment for an international
      customer.




*Product
      and service innovations and capabilities continued during the first quarter
      of
      2007 as illustrated by the following highlights:*




·
            the
                use of nine new Rapid Deployment Cartridges (“RDC”) increased productivity
                for the installation of Steel Flying Leads (“SFLs”) and greatly improved
                the ability  to carry more flying leads on the deck of an
                installation vessel, saving valuable vessel time and reducing the
                number
                of trips to and from the dock. Deep Down can carry up to eighteen
                SFLs
                within a very small footprint on the deck of a marine vessel with
                these
                RDCs.




·
              the
                  new Electrical Hydraulic Loose Tube SFLSs for the Gomez project have
                  been successfully installed. This new product innovation greatly
                  extends
                  the typical range for delivering electronic capabilities in SFLs
                  up to
                  10,000 feet and reduces the need for in-field umbilicals in certain
                  applications.


·
            the
                successful installation of umbilical bend stiffeners on the
                Independence HUB has established a new standard in the BS Latcher
                design
                for ultra high bending moment applications in 8,000 foot and deeper
                water
                depths





·
            the
                successful support of one of our significant customers in the provision
                of
                fast paced seismic equipment reinforces our ability to forge positive
                alliances with companies that have similar product
                lines





·
            our
                offshore remediation team was successful in unclogging an umbilical
                line
                for a customer with an immediate
                need





·
            we
                have just completed the fabrication of a subsea multiphase flowmeter
                running tool, which is undergoing System Integration Testing (“SIT”) and
                about to be shipped offshore





·
            several
                varities of Subsea Hold-back clamps were delivered to an installation
                contractor to support their deep water
                efforts


·
              we
                  recovered an  Acoustic Doppler Current Profiler ("ADCP") system with
                  our equipment for the Thunder horse project.






We
      continue to support our installation contracting customers with installations
      of
      SFLs, and our major operating customers with the provision of offshore testing,
      monitoring, remediation and/or commissioning work. Our equipment rental fleet
      has been expanded to now include five (5) Horizontal Drive Unit systems to
      provide flying lead and specialty cable installation deployment capabilities
      with our fleet of pumps, under rollers, buoyancy compensators and other tools
      and equipment.




We
      remain
      committed to supporting the operator, installation contractor, and umbilical
      and
      controls supplier to enhance the progression and completion of major offshore
      oil and gas exploration and production projects.





**Results
      of operations**





The
      Company generated revenue of approximately $2,098,394 for the three months
      ended
      March 31, 2007, with cost of sales of $1,252,089 for a gross profit of $846,305,
      or 40.3%. Revenues were generated by the many projects discussed in the
      Executive Overview above.





We
      had
      selling, general and administrative expenses of $659,651 which includes
      approximately $161,700 of expenses related to SEC reporting requirements,
      including accounting fees for a three year audit, and a general analysis of
      the Company’s historical books and records; $232,290 of payroll and employee
      costs for the building of company infrastructure and to support future growth;
      and other general expenses for rent, insurance and office costs.





The
      Company paid interest expense totaling $52,300 related to our bank loans,
      capital leases and fees for factoring of accounts receivable. We also recorded
      interest expense related to the accretion of the Series E and G Preferred stock
      totaling $179,587.





13


**Liquidity
      and Capital Resources**





During
      the three months ended March 31, 2007, we had operating cash flows of $144,083,
      offset by investing outflows of $395,439, which were financed by cash generated
      by operations and proceeds from the private placement offering of $1,000,000.
      We
      also used cash to redeem 250 shares of the Series E Preferred Stock for face
      value of $250,000, and an additional $250,000 in cash was paid as part of the
      stock exchange agreement with a former director of the Company. At March 31,
      2007, we had cash totaling $97,977, working capital of $698,700, current
      liabilities of $2,194,472, long term liabilities of $6,977,010 and
      stockholders’ deficit of $1,800,660.





***Sources
      and Uses of Cash***





We
      use
      cash to pay for materials and payroll related costs to build the equipment
      our
      customers have ordered prior to receipt of related progress payments. On
      occasion we may use cash to sub-contract fabrication to meet specific contract
      deadlines.





We
      believe we have raised sufficient capital to finance our operations. However,
      we
      may strategically seek sources of financing to expand our product development
      efforts and pursue strategic acquisitions. Additionally, unanticipated events
      may negatively impact our ability to increase revenue-generating activities
      and
      we may need to obtain future sources of financing to continue existing
      operations. Such future sources may include cash from equity offerings, exercise
      of warrants and stock options and proceeds from debt instruments. There can
      be
      no assurance that such equity or borrowings will be available or, if available,
      will be at rates or prices acceptable to us.





***Analysis
      of Cash flows***


During
        the three months ended March 31, 2007, we had net operating cash inflows
        of
        $144,083. Although we incurred a net loss of $102,258 for the quarter, it
        included non-cash expenses of depreciation $64,025 and amortization of debt
        discount of $179,587 on our Series E and G preferred stock. While we had
        significant changes in various operating assets and liabilities, these changes
        did not have a significant impact on our operating cash flows as the impacts
        largely offset each other.




The
      Company had investing outflows of $395,439, consisting of the purchase of
      equipment of $290,373 and payment of ElectroWave debt of $366,134 which was
      partially offset by the factoring of ElectoWave’s receivables for $261,068. In
      addition, we received proceeds from a private placement offering of stock for
      $1,000,000, which were partially used to redeem 250 shares of Series E preferred
      shares for $250,000 and a cash payment to a shareholder for the cancellation
      of
      common stock totaling $250,000. Also, the Company entered into an 84 month
      capital lease for a 100-ton Shuttlelift crane, where the equipment and
      offsetting capital lease liability of $525,000 were reflected as noncash
      investing and financing activities.





We
      plan
      to meet our cash requirements in 2007 with cash generated from operations in
      addition to the $1,000,000 raised in the private placement in March 2007. We
      will continue to expand our product line offerings, and we are projecting to
      spend a minimum of $250,000 to expand our rental fleet and approximately
      $150,000 to develop new products.





We
      continue to evaluate acquisitions and joint ventures in the ordinary course
      of
      business. When opportunities for business acquisitions meet our standards,
      we
      believe we will have access to capital sources necessary to take advantage
      of
      those opportunities.





14


**Recent
      Accounting Pronouncements**





In
      July
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes (FIN 48) - an interpretation of FASB Statement No. 109, Accounting
      for Income Taxes (SFAS No. 109)” (FIN 48). FIN 48 clarifies the accounting for
      uncertainty in income taxes recognized in accordance with SFAS No. 109 and
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a return. Guidance is also provided on de-recognition, classification,
      interest and penalties, accounting in interim periods, disclosure and
      transition. FIN 48 is effective for fiscal years beginning after December 15,
      2006. The effect of adoption of FIN 48 did not have a material impact on the
      Company’s consolidated financial statements.





In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements” (SFAS
      157). SFAS 157 defines fair value, establishes a framework for measuring fair
      value and expands disclosures about fair value measurements. Where applicable,
      SFAS 157 clarifies and codifies related guidance within other generally accepted
      accounting principles. SFAS 157 is effective for fiscal years beginning after
      November 15, 2007. The effect of adoption of SFAS 157 is not anticipated to
      have
      a material impact on the Company’s consolidated financial
      statements.





**Inflation
      and Seasonality**





We
      do not
      believe that our operations are significantly impacted by inflation. Our
      business is not seasonal in nature.




**Item
      3.** **Controls
      and Procedures**




We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our Exchange Act reports is recorded,
      processed, summarized and reported within the time periods specified in the
      Securities and Exchange Commission’s rules and forms, and that such information
      is accumulated and communicated to our management, including our Chief Executive
      Officer and Chief Financial Officer, as appropriate, to allow for timely
      decisions regarding required disclosure. In designing and evaluating the
      disclosure controls and procedures, management recognizes that any controls
      and
      procedures, no matter how well designed and operated, can provide only
      reasonable assurance of achieving the desired control objectives, and management
      is required to apply its judgment in evaluating the cost-benefit relationship
      of
      possible controls and procedures.





As
      of  March 31, 2007 (the “Evaluation Date”), we carried out an evaluation,
      under the supervision and with the participation of our management, including
      our Chief Executive Officer and our Chief Financial Officer, of the
      effectiveness of the design and operation of our disclosure controls and
      procedures. Based on the foregoing, our Chief Executive Officer and Chief
      Financial Officer concluded that, as of the Evaluation Date, our disclosure
      controls and procedures were not effective at the reasonable assurance level
      and
      in compliance with Section 404 of the Sarbanes-Oxley Act. While conducting
      the review of the interim financial statements as of and for the period
      ended March 31, 2007, our independent auditors found numerous adjustments that
      indicated a material weakness in our controls over financial reporting. It
      is
      our plan with additional funding to devote more resources to this very critical
      function.





To
      the
      best of our knowledge and belief, there has been no change in our internal
      controls over financial reporting during the three months ended March 31, 2007
      that has materially affected, or is reasonably likely to materially affect,
      our
      internal control over financial reports.





15


**PART
      II - OTHER INFORMATION**





**Item
      1.** **Legal
      Proceedings**





We
      are
      from time to time involved in legal proceedings arising from the normal course
      of business. As of the date of this report, we are not currently involved in
      any
      legal proceedings.




**Item
      2.** **Unregistered
      Sales of Equity Securities and Use of Proceeds**




On
      March
      20, 2007, the Company completed the sale of 10,000,000 shares of common stock
      in
      a private placement for $1,000,000. A total of 1,025,000 shares were purchased
      by  the Chief Executive Officer, and director and his wife, Vice-President
      of the Company. The shares are restricted as defined in Rule 144 of the
      Securities Act of 1933 and contain a restrictive legend, which restricts the
      ability of the holders to sell these shares for a period of no less than one
      year. Funds were used to redeem certain outstanding exchangeable preferred
      stock
      and for working capital.




The
      Company finalized the terms of an agreement with Daniel L. Ritz, Jr.
      (shareholder and director), who agreed to surrender 25,000,000 shares of common
      stock for $250,000 in cash (par value). Additionally, he surrendered 1,500
      shares of Series F convertible preferred stock and 500 shares of Series G
      exchangeable preferred stock to the Company for cancellation. For these actions,
      Mr. Ritz received 1,250 shares of Series E exchangeable preferred stock. In
      addition, Mr. Ritz kept 500 shares of Series E exchangeable preferred stock
      he
      previously owned and agreed to tender his resignation from the Board.




The
      Company issued 2,000 shares of Series E exchangeable preferred stock to John
      C.
      Siedhoff (shareholder, Chief Financial Officer, and director) for the surrender
      of his ownership of 1,500 shares of Series F convertible preferred stock and
      500
      shares of Series G exchangeable preferred stock, which were returned to the
      transfer agent for cancellation.




The
      offers and sales of the securities in the private placement are exempt from
      the
      registration requirements of the Securities Act of 1933 (the “Act”) pursuant to
      Rule 506 and Section 4(2) of the Act. In connection with the offers and sales,
      we did not conduct any general solicitation or advertising, and we complied
      with
      the requirements of Regulation D relating to the restrictions on the
      transferability of the shares issued.




**Item
      3.** **Defaults
      Upon Senior Securities**




None




**Item
      4.** **Submission
      of Matters to a Vote of Security Holders.**




None




**Item
      5.** **Other
      Information.**




None




16




**Item
      6.** **Exhibits** **.**




**Exhibit**
              **Number**
            
            **Description**
            
            **By
                Reference**
              **from****Document**31.1
            
            Certification
                of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14 of
                the
                Securities Exchange Act of 1934
            
            *31.2
            
            Certification
                of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14 of
                the
                Securities Exchange Act of 1934
            
            *32.1
            
            Certification
                Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002
            
            *32.2
            
            Certification
                Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002
            
            *


* Filed
      herewith







**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned, thereunto
      duly authorized.





**DEEP
                DOWN, INC.**(Registrant)Signature
            Title
            Date/s/RONALD
                E. SMITH
            President,
                CEO and Director
            May
                18, 2007Ronald
                E. Smith
            (Principal
                Executive Officer)/s/ROBERT
                E. CHAMBERLAIN, JR.
            Chairman,
                and Acting Chief Financial Officer
            May
                18, 2007Robert
                E. Chamberlain, Jr.
            (Principal
                Financial Officer)






17