1373670--3/30/2009--BioFuel_Energy

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{regulation, government, change}

{personnel, key, retain}

{provision, law, control}

{loss, insurance, financial}

{competitive, industry, competition}

{acquisition, growth, future}

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Risks relating to our business and industry We have a very limited operating history and our business may not succeed. Our auditors have expressed substantial doubt about our ability to continue as a going concern. We may encounter unanticipated difficulties in operating our plants, which could reduce sales and cause us to incur substantial losses. Crush spreads have narrowed, and may decline further, making profitable operation of our plants difficult or impossible. Our significant hedging losses in 2008 have resulted in decreased liquidity. Results may be adversely affected by future hedging transactions and other strategies. We have incurred a significant amount of indebtedness to construct our facilities and to operate our business, virtually all of which is secured by our assets. Our substantial indebtedness could have important consequences by adversely affecting our financial position. We are subject to risks associated with our existing debt arrangements. Increased acceptance of ethanol as a fuel and construction of additional ethanol production plants could lead to shortages of availability and increases in the price of corn. Excess production capacity in our industry resulting from new plants under construction or decreases in the demand for ethanol or distillers grain could adversely affect our business. Competition for qualified personnel in the ethanol industry is intense, and we may not be able to retain qualified personnel to operate our ethanol plants. We are dependent upon our officers for management and direction, and the loss of any of these persons could adversely affect our operations and results. We are dependent on our commercial relationship with Cargill and subject to various risks associated with this relationship. New, more energy-efficient technologies for producing ethanol could displace corn-based ethanol and materially harm our results of operations and financial condition. Our profit margins may be adversely affected by fluctuations in the selling price and production cost of gasoline. Our business will be highly dependent on commodity prices, which are subject to significant volatility and uncertainty, and on the availability of raw materials supplies, so our results of operations, financial condition and business outlook may fluctuate substantially. Our business is highly sensitive to corn prices, and we generally cannot pass along increases in corn prices to our customers. The market for natural gas is subject to market conditions that create uncertainty in the price and availability of the natural gas that we will use in our manufacturing process. We may not be able to compete effectively. Growth in the sale and distribution of ethanol depends on changes to and expansion of related infrastructure which may not occur on a timely basis, if at all. Transportation delays, including as a result of disruptions to infrastructure, could adversely affect our operations. Disruptions in the supply of oil or natural gas could materially harm our business. Our business may be influenced by seasonal fluctuations. The price of distillers grain is affected by the price of other commodity products, such as soybeans, and decreases in the price of these commodities could decrease the price of distillers grain. Our financial results may be adversely affected by potential future acquisitions or sales of our plants, which could divert the attention of key personnel, disrupt our business and dilute stockholder value. The domestic ethanol industry is highly dependent upon a myriad of federal and state legislation and regulation and any changes in legislation or regulation could adversely affect our results of operations and financial position. We may be adversely affected by environmental, health and safety laws, regulations and liabilities. Risks relating to the ownership of our common stock The existing market for our common stock is illiquid, and we do not know whether a liquid trading market will develop. Our common stock could be delisted from The Nasdaq Global Market, which could negatively impact the price of our common stock and our ability to access the capital markets. The price of our common stock may be volatile. Certain stockholders' shares are restricted from immediate resale but may be sold into the market in the near future, which could cause the market price of our common stock to decrease significantly. The historical equity investors, including some of our officers and directors own a significant percent of our shares and will exert significant influence over us. Their interests may not coincide with yours and they may make decisions with which you may disagree. We do not intend to pay dividends on our common stock. The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner. Risks relating to our organizational structure Our only material asset is our interest in BioFuel Energy, LLC, and we are accordingly dependent upon distributions from BioFuel Energy, LLC to pay dividends, taxes and other expenses. We will be required to pay the historical LLC equity investors for a portion of the benefits relating to any additional tax depreciation or amortization deductions we may claim as a result of tax basis step-ups we receive in connection with future exchanges of BioFuel Energy, LLC membership interests for shares of our common stock. Provisions in our charter documents and our organizational structure may delay or prevent our acquisition by a third party or may reduce the value of your investment. If BioFuel Energy Corp. were deemed an "investment company" under the Investment Company Act of 1940 as a result of its ownership of BioFuel Energy, LLC, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

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1373670--3/30/2009--BioFuel_Energy_Corp.