Replies to post #63678 on Koil Energy Solutions Inc. (KLNG)

[xZx]

FT looks to me like they have 20% net margins. i'm not saying this to convince you, but rather to uphold what i feel is a far more balanced view of this company's prospects. to hear you talk, one would come away thinking management is downright reckless with shareholder cash, constantly putting themselves on the ragged edge of disaster with every deal. imo this couldn't be further from the truth. yes, the are being aggressive, but when you know how to drive you can take the curves a bit faster. jmho.

[JoeSmith]

And may all your Interest expenses (2) be the kind you don't have to pay cash for!


Cash interest expense $ 594,667

Amount related to accretion $1,644,991

"which generated non-cash interest expense of $1.6 million, plus approximately $42,000 of non-cash interest expense on the 500 shares of Series E Preferred"

" Excluding the one-time gain on debt extinguishment discussed above and non-cash interest and stock based compensation charges, earnings before depreciation, interest, amortization, taxes and other non-cash charges (“EBITDA”) for the twelve months ended December 31, 2007 was $2.2 million, an increase of $0.9 million from $1.3 million for the comparable period in 2006."

Supplemental Disclosures:

Cash paid for interest $594,667

*See accompanying notes to consolidated financial statements. <~~~ all 10Ks have these

Notes to Consolidated Financial Statements for the year ended December 31, 2007
and the period from inception (June 29, 2006) through December 31, 2006


Note 8: Preferred Stock <~~~ here is theirs
The difference between the face value of the Series E and G preferred stock and the discounted book value recorded on the balance sheet, or original issue discount, is deemed to be non-cash interest expense from the date of issuance through the term of the Stock.

Deep Down has been accreting this original issue discount using the effective interest method. Interest expense related to the accretion of the original issue discount totaled approximately $1,644,990 and $40,149 for the year ended December 31, 2007 and 2006 respectively.

~ Deep Down accreted the remaining discount of $1,017,707 attributable to such shares on the date of redemption as interest expense. The shareholder placed all 4,000 shares into an escrow account as of the execution of this agreement.

~The Series E preferred shares were redeemed for 1,213,592 shares of common stock at the closing price of $1.03. Deep Down accreted the remaining discount of $260,520 attributable to such shares on the date of redemption and recorded it as interest expense.

Yes, It's complicated
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