Koil Energy Solutions Inc. (KLNG)

[Banks]

I sent off an e-mail yesterday to Steve regarding the recent trading action. This is a first class outfit. I have ALWAYS received a reply from them, in short order most times too. Apparently, he had more then one inquiry yesterday into the trading action of the stock.
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Banks:

I answer in kind below for your convenience.

Thanks for your interest, and feel free to contact me if you need anything further.

Regards,
Steven M. Haag
Vice-president of Investor Relations
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From: Banks
Sent: Wednesday, June 25, 2008 11:58 AM
To: Steve Haag
Subject: Question?
Steve

I find the recent price action of Deep Down stock quite distressing. Given all the positives the company has recently announced (FloTec closure, 14M in new orders, etc.) I am more than a little concerned something is going on behind the scenes.

Banks:
Has the company investigated naked short selling of the stock?

Steve:
We have no evidence of any significant short selling activities.

Banks:
Does the company have any plans to investigate what may be taking place with the strange trading action.

Steve:
No, the company is sound, debt free, growing by double-digits, with seasoned management in the most robust industry currently available to invest in. Deep Down is strong and growing. There are no problems here at Deep Down.

In my humble opinion, I respectfully find nothing "strange" about the trading action, unnerving YES, but strange, no.

First, we have a low float causing wider swings than a larger float stock.

Second, we are in Summer and about a week away from the July Fourth holiday.

Third, someone obviously sold some shares (although I don't see massive volume, albeit double the normal), then it appeared that some day traders and chart purist who don't look at company fundamentals, unlike medium and long term investors, and who watch every single tick and try to understand what "caused" it, possibly felt they must sell, causing a self-fulfilling prophecy; yes, the price goes down then. - I say this because I see all these 200, 300, 500 trades today. That, to me, is purely day traders, because nothing has changed with the Company except we have gotten considerably stronger. In my honest opinion, the psychology of investing is working overtime here - survival of the fittest as it were.

So, the question I have then is, why sell at all when the company is obviously strong and growing, and it is apparent that we have just begun to grow, and when it is obvious this is a typical fluctuation possibly fueled by irrational fear? That is a question only the seller can answer.

One thing I am sure of, MMs know they can rattle, and get retailers to sell into their hands by playing with the day's tape - so much for the soundness of SOLELY using charts to indicate the right time buy and sell. MMs know what to do, and can predict behavior well.

No, IMO, only complete diagnostics will determine the health of any organism - using only one parameter always skews results and any predictability they may infer. That is why the longs are NOT wringing their hands with every tick of the tape, IMHO. Yes, my background is heavy in statistical analyses - LOL.

The prognosis for Deep Down is VERY, VERY good, IMO.

EVERY long term investor that has communicated with me recently has been very bullish about the company in spite of seasonal fluctuations - for what that is worth. The trading has been just that - trading - IMO.