912365--3/24/2008--EVERGREEN_ENERGY

related topics

{gas, price, oil}

{debt, indebtedness, cash}

{stock, price, share}

{property, intellectual, protect}

{cost, operation, labor}

{cost, regulation, environmental}

{cost, contract, operation}

{provision, law, control}

{tax, income, asset}

{control, financial, internal}

{personnel, key, retain}

{operation, international, foreign}

{regulation, government, change}

{acquisition, growth, future}

{capital, credit, financial}

We have a history of losses, deficits, and negative operating cash flows and will likely continue to incur losses in the future. Such losses may impair our ability to pursue our business plan. We have substantial capital requirements and, as a result, we have been and continue to be dependent on financing activities or sales of our equity securities to fund our operating costs. We have a limited operating history as an energy solutions company, and our business and prospects should be considered in light of the risks and difficulties typically encountered by a company with a limited operating history. We rely on key personnel and if we are unable to retain or attract qualified personnel, we may not be able to execute our business plan. Our acquisition activities may not be successful. Competition from other companies in the clean coal and alternative fuel technology industries, including competition resulting from deregulation in the United States power industry, could adversely affect our competitive position. Overseas development of our business is subject to international risks, which could adversely affect our ability to license, construct or operate profitable overseas plants. We faced technical and operational issues with improving capacity utilization at our Fort Union plant prior to suspending operations at the plant. These technical and operational problems may adversely impact our ability to operate or develop future K-Fuel or K-Direct facilities, resulting in delays in achieving full scale commercial production of our K-Fuel refined coal. We do not know if K-Fuel refined coal is commercially viable. Construction of future K-Fuel or K-Direct facilities will require substantial lead time and significant additional financing. Any negative results from the continuing evaluation of K-Fuel refined coal produced at future facility sites by us or third parties could have a material adverse effect on the marketability of K-Fuel refined coal and future prospects. Due to the uncertain market for, and commercial acceptance of, our K-Fuel refined coal, we may not be able to realize significant revenues from the sale of K-Fuel refined coal. If we are unable to construct and commercialize K-Fuel production plants, our ability to generate profits from this process will be impaired. Regulation of the K-Fuel process and K-Fuel refined coal may adversely affect our financial condition and results of operations and cash flows. Compliance with environmental laws and regulations may increase our costs and reduce our future sales. Future changes in the law may adversely affect our ability to sell our products and services. Our inability to adequately protect and defend our proprietary process could harm our business, increase our costs and decrease sales of our products and services. Our success will depend on our ability to operate without infringing on or misappropriating the proprietary rights of others. A substantial or extended decline in coal prices could reduce our revenues and the value of our coal reserves. Our coal mining production and delivery is subject to conditions and events beyond our control, which could result in higher operating expenses and/or decreased production and sales and adversely affect our operating results and cash flows. Our current business will be adversely affected if we are unable to develop or acquire additional coal reserves that are economically recoverable. We face numerous uncertainties in estimating our recoverable coal reserves, and inaccuracies in our estimates could result in decreased profitability from lower than expected revenues or higher than expected costs. Risks Relating to Our Debt, Our Common Stock and Other Risks Our debt obligations may affect our business, operating results and financial condition. The notes contain restrictive covenants that limit our operational flexibility. Our ability to pay principal and interest on outstanding indebtedness depends upon our receipt of dividends or other intercompany transfers from our subsidiaries, and claims of creditors of our subsidiaries that do not guarantee our indebtedness will have priority over claims you may have as for our guaranteed indebtedness with respect to the assets and earnings of those subsidiaries. We may not have the ability to repurchase the notes for cash upon the occurrence of a fundamental change as required by the indenture governing the notes. The value of the collateral may not be sufficient to repay the holders of the notes in an event of default. Our stock price has been volatile historically and may continue to be volatile. The price of our common stock, and therefore the price of the notes, may fluctuate significantly, which may make it difficult for holders to resell the notes or the shares of our common stock issuable upon conversion of the notes when desired or at attractive prices. Sales of a significant number of shares of our common stock in the public markets, or the perception of such sales, could depress the market price of the notes. Conversion of the notes may dilute the ownership interest of existing stockholders, including holders who have previously converted their notes. We may not be able to refinance the notes if required or if we so desire. We may be unable to deduct for tax purposes the interest or original issue discount, if any, paid or accrued on the notes. Our stock price has been volatile, and your investment in our common stock could suffer a decline in value. A substantial number of shares we have issued in exempt transactions are, or are being made, available for sale on the open market, and the resale of these securities might adversely affect our stock price. Our certificate of incorporation and by-laws include anti-takeover provisions that may enable our management to resist an unwelcome takeover attempt by a third party. We have not paid cash dividends on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future.

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912365--3/24/2008--EVERGREEN_ENERGY_INC