1283193--4/15/2008--PURE_BIOFUELS

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{gas, price, oil}

{customer, product, revenue}

{debt, indebtedness, cash}

{personnel, key, retain}

{regulation, change, law}

{stock, price, share}

{stock, price, operating}

{cost, regulation, environmental}

{interest, director, officer}

{cost, contract, operation}

{operation, international, foreign}

{cost, operation, labor}

{acquisition, growth, future}

{provision, law, control}

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Risks Related To Our Business We have no operating history on which to base an evaluation of our business. There can be no assurance that we will be able to complete the construction of our proposed biodiesel processing plant on schedule or at all, and therefore we may never realize any revenues. We will require significant amounts of additional financing in order to complete construction and commence operations at our biodiesel facilitates. There can be no assurances that we will be able to secure such financing on terms that are favorable to us or at all. The fact that we have not earned any revenues since our incorporation raises substantial doubt about our ability to continue as a going concern. The cost of construction for our proposed Callao Port Facility could increase and, if an increase occurs, our reserves may be depleted and the additional debt or equity capital that may be required could delay and diminish our profitability and decrease the value of your investment in our company. Our business could be significantly impacted by changes in government regulations over energy policy. Our future growth is dependent upon strategic relationships with existing petroleum distributors and feedstock suppliers. If we are unable to establish and maintain such relationships, our future business prospects could be significantly limited. We plan to grow very rapidly, which may place strains on our management team and other company resources. Our proposed operations involve certain environmental risks, including spills or leaks of hazardous and/or flammable substances, which may negatively impact our financial condition. We are dependent on a limited source of supply of oil bearing crops while we are developing our own feedstock plantations. Potential risks and key sustainability issues relating to biodiesel may reduce the demand for biodiesel and reduce our future revenue. Potential risks and key sustainability issues relating to biodiesel may reduce the demand for biodiesel and reduce our future revenue. A significant decline in the price of oil could cause our business to lose customers or render our operations unprofitable. There are risks associated with conducting our business operations in Peru, including political and social unrest. We will depend on key service providers for assistance and expertise in beginning operations and any failure or loss of these relationships could delay our operations, increase our expenses and hinder our success. Defects in the construction or performance of our proposed biodiesel processing plants could result in a reduction in our revenues and profitability and in the value of your investment in our company. Our business will not be diversified because we will be primarily dependent upon one product. As a consequence, we may not be able to adapt to changing market conditions or endure any decline in the biodiesel industry. Our financial results will be vulnerable to commodity price risk for our feedstock supplies and market prices for the biodiesel that we produce. Our operating costs could be higher than we expect, and this could reduce our income and any distributions we may make. The market price of biodiesel has followed the price of petroleum fuels, such as diesel fuel, and decreases in the price of petroleum-based fuels would very likely decrease the price of biodiesel, resulting in reductions in our revenues. We do not currently employ any hedging strategies relating to our feedstocks or other raw materials. The geographic concentration of our properties in Peru subjects us to an increased risk of loss of revenue or curtailment of production from factors affecting that region specifically. There are several agreements and relationships that remain to be implemented which are critical to our operations, expenses and profitability. Delays due to, among others, weather, labor or material shortages, permitting or zoning delays, or opposition from local groups, may hinder our ability to commence operations in a timely manner. Our business is subject to comprehensive government regulation and any change in such regulation may have a material adverse effect on our company. Decommissioning costs are unknown and may be substantial. Technological advances and changes in production methods in the biodiesel industry could render our plant obsolete and adversely affect our ability to compete and the value of your investment. The development of alternative fuels and energy sources may reduce the demand for biodiesel, resulting in a reduction in our profitability. Competition for qualified personnel in the biodiesel industry is intense and we may not be able to hire and retain qualified managers, engineers and operators to operate our plant, if and when completed, efficiently. Compliance with new and existing environmental laws and regulations could significantly increase our construction and start-up costs, and force us to delay or halt construction or operation. Our ability to hire and retain key personnel will be an important factor in the success of our business and a failure to hire and retain key personnel may result in our inability to manage and implement our business plan. Most of our assets and some of our directors and officers are outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or any of our directors or officers. Risks Related to Our Common Stock The market price of our common stock may be highly volatile and subject to wide fluctuations. The number of issued and outstanding warrants, options and convertible securities poses the risk of dilution of ownership and voting power of our existing stockholders. Our principal stockholders will have significant voting power and may take actions that may not be in the best interests of other stockholders. Investors should not anticipate receiving cash dividends on our common stock. Our management team does not have extensive experience in public company matters. We have debt obligations which we may not be able to service. Our failure to comply with the covenants contained in the Loan Agreement or the PIK Notes, or any other agreement governing our debt, including our failure as a result of events beyond our control, could result in an event of default, which would materially and adversely affect our financial condition. Weakness of the U.S. dollar versus other currencies may increase our costs of operation and adversely affect our reported operating results. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. Our ability to take certain actions may be restricted by the terms of our indebtedness. Nevada law and our corporate charter and bylaws contain anti-takeover provisions that could delay or discourage takeover attempts that stockholders may consider favorable.

Full 10-K form ▸

1283193--4/15/2008--PURE_BIOFUELS_CORP