1371451--1/29/2010--HIGHWATER_ETHANOL

related topics

{gas, price, oil}

{cost, regulation, environmental}

{debt, indebtedness, cash}

{loss, insurance, financial}

{condition, economic, financial}

{competitive, industry, competition}

{property, intellectual, protect}

{personnel, key, retain}

{control, financial, internal}

{capital, credit, financial}

{regulation, change, law}

Risks Relating to Our Business Increases in the price of corn or natural gas would reduce our profitability. Risks Relating to Our Business We may engage in hedging transactions in the future which involve risks that could harm our business Declines in the price of ethanol or distillers grains would significantly reduce our revenues. We have a significant amount of debt, and our existing debt financing agreements contain restrictive covenants that limit distributions and impose restrictions on the operation of our business. We may violate the terms of our credit agreements and financial covenants which could result in our lender demanding immediate repayment of our loans. Our inability to secure credit facilities we may require in the future may negatively impact our liquidity. The ethanol industry is an industry that is changing rapidly which can result in unexpected developments that could negatively impact our operations. We may engage in hedging transactions in the future which involve risks that could harm our business. Our business is not diversified. We depend on our management and key employees, and the loss of these relationships could negatively impact our ability to operate profitably. Changes and advances in ethanol production technology could require us to incur costs to update our plant or could otherwise hinder our ability to compete in the ethanol industry or operate profitably. We have a limited operating history. Risks Related to Ethanol Industry Demand for ethanol may not continue to grow unless ethanol can be blended into gasoline in higher percentage blends for conventional automobiles. Technology advances in the commercialization of cellulosic ethanol may decrease demand for corn based ethanol which may negatively affect our profitability. New plants under construction or decreases in the demand for ethanol may result in excess production capacity in our industry Decreasing gasoline prices may negatively impact the selling price of ethanol which could reduce our ability to operate profitably Growth in the ethanol industry is dependent on growth in the fuel blending infrastructure to accommodate ethanol, which may be slow and could result in decreased demand for ethanol. We operate in an intensely competitive industry and compete with larger, better financed entities which could impact our ability to operate profitably. Competition from the advancement of alternative fuels may lessen the demand for Consumer resistance to the use of ethanol based on the belief that ethanol is expensive, adds to air pollution, harms engines and/or takes more energy to produce than it contributes may affect the demand for ethanol. Risks Related to Regulation and Governmental Action Government incentives for ethanol production, including federal tax incentives, may be eliminated in the future, which could hinder our ability to operate at a profit Changes in environmental regulations or violations of these regulations could be expensive and reduce our profitability. Carbon dioxide may be regulated in the future by the EPA as an air pollutant requiring us to obtain additional permits and install additional environmental mitigation equipment, which could adversely affect our financial performance

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1371451--1/29/2010--HIGHWATER_ETHANOL_LLC