Deep Down Completes $6 Million Financing

Deep Down 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.

We are pleased to welcome Prospect to our business plan as a financial partner. This relationship is designed to more quickly facilitate our Company's internal and external corporate growth strategies, in particular acquisitions of complementary businesses," commented Robert E. Chamberlain, Jr., Deep Down's chairman.

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.

Ron Smith, Deep Down's president commented, "This is a milestone event for the shareholders of this Company and I could not be more excited about our new relationship with Prospect. I expect this agreement to significantly enhance our growth abilities and accelerate shareholder value."

"We plan to use $1.4 million to redeem $2.8 million of Series E Exchangeable Preferred stock, approximately $940,000 to pay off bank debt, and the balance of net proceeds for working capital, capital expenditures, and general corporate purposes," added Gene Butler, Deep Down's chief financial officer.

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