Koil Energy Solutions Inc. (KLNG)

[captain america]

Form 8-K for DEEP DOWN, INC.

7-Aug-2007

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance S


Item 2.03 - Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

On August 7, 2007 Deep Down, Inc. announced that it has entered into a $6 million secured credit agreement with Prospect Capital Corporation to recapitalize the balance sheet and provide working capital to accelerate development of its corporate growth strategies.

The senior debt facility provides for a 4-year term, an annual interest rate of 15.5% with the ability to defer up to 3.0% through a PIK (paid-in-kind) feature, principal payments of $75,000 per quarter beginning September 30, 2008, and a warrant to purchase up to 4,960,585 shares of common stock at an exercise price of $0.507 per share (set on the date the Letter of Intent was executed). The warrant is not exercisable until the two-year anniversary of the financing.



Item 9.01. Financial Statements and Exhibits

Exhibit A Press Release dated August 7, 2007 Exhibit B Credit Agreement dated August 6, 2007

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