931148--3/16/2006--GRAFTECH_INTERNATIONAL

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We are dependent on the global steel and aluminum industries and also sell products to the transportation, semiconductor, petrochemical and other metals industries. Our results of operations may deteriorate during global and regional economic downturns. The planned growth of our natural graphite sales, which depends primarily on the successful and profitable development, manufacture and sale of thermal management products for electronic devices and products for PEM fuel cells and fuel cell systems, may not be achieved. Our financial condition could suffer if we experience unanticipated costs as a result of antitrust investigations and antitrust and securities class action lawsuits and claims. We are highly leveraged and our substantial debt and other obligations could limit our financial resources and ability to compete and may make us more vulnerable to adverse economic events. Our cash flow and capital resources may be insufficient to enable us to service our debt and meet our other obligations as they become due. We are subject to restrictive covenants under the Revolving Facility and the Senior Notes. These covenants could significantly affect the way in which we conduct our business. Our failure to comply with these covenants could lead to an acceleration of our debt. We are subject to risks associated with operations in multiple countries. Our ability to grow and compete effectively depends on protecting our intellectual property. Failure to protect our intellectual property could adversely affect us. Our current and former manufacturing operations are subject to increasingly stringent health, safety and environmental requirements. We are dependent on supplies of raw materials and energy at affordable prices. Our results of operations could deteriorate if that supply is substantially disrupted for an extended period. Our results of operations could deteriorate if our manufacturing operations were substantially disrupted for an extended period. We have significant non-dollar-denominated intercompany loans and have had in the past, and may in the future have, foreign currency financial instruments and interest rate swaps and caps. The related gains and losses have in the past been, and may in the future be, significant. Our results of operations for any quarter are not necessarily indicative of our results of operations for a full year. The graphite and carbon industry is highly competitive. Our market share, net sales or net income could decline due to vigorous price and other competition. To achieve our planned growth and successfully complete our overhead cost reduction and restructuring activities, we may need to attract qualified personnel. Failure to do so could adversely affect us. We may not be able to complete our planned asset sales. We have significant deferred income tax assets in multiple jurisdictions, and we may not be able to realize any benefits from those assets. Risks Relating to Our Securities and Pledges of Our Assets The Senior Notes and the related guarantees have limited security, and the Debentures and the related guarantees have no security. As a result, the Debt Securities are effectively subordinated to the Revolving Facility, which is secured by most of our assets, and to certain other secured debt and obligations. This could result in holders of the Debt Securities receiving less on liquidation than the lenders under the Revolving Facility and certain other creditors. In addition, this could result in holders of the Debentures receiving less on liquidation than the holders of the Senior Notes. unsecured intercompany term note obligors unsecured intercompany term note obligations We have a holding company structure. The issuer of the Senior Notes is a special purpose finance company. The issuer of the Debentures is our parent holding company. Accordingly, the Senior Notes and the Debentures are structurally subordinated to certain of our obligations. The provisions of the unsecured intercompany term note obligations can be changed, and the unsecured intercompany term notes can be prepaid in whole or in part, without the consent of the holders of the Senior Notes under certain circumstances. Prepayment would increase the structural subordination of the Senior Notes. Prepayment or changes in such provisions could reduce or eliminate the ability of holders of the Senior Notes to seek recovery directly from our foreign subsidiaries upon a default under the Senior Notes. In the event of the bankruptcy or insolvency of any of the subsidiary guarantors of the Senior Notes or the unsecured intercompany term note obligors, the guarantee of the Senior Notes by such guarantor or the unsecured intercompany term note and the unsecured intercompany term note guarantee of such obligor could be voided or subordinated. In the event of the bankruptcy or insolvency of any of the subsidiary guarantors of the Debentures, the guarantee of the Debentures by such guarantor could be voided or subordinated. We may not have the ability to purchase the Senior Notes upon a change of control as required by the Senior Notes. We may not have the ability to purchase the Debentures upon a fundamental change or upon specified dates as required The Senior Notes, the Debentures and the respective related guarantees rank equally with each other and certain of our other debt and liabilities. The value of the conversion right associated with the Debentures may be substantially lessened or eliminated if we are party to a merger, consolidation or other similar transaction. The conditional conversion feature of the Debentures could result in a holder receiving less than the value of the common stock into which a Debenture is convertible. A holder of Debentures is not entitled to any rights with respect to our common stock, but will be subject to all changes made with respect to our common stock. The Debenture Indenture contains only limited covenants, which may not protect a holder s investment if we experience significant adverse changes or engage in a highly leveraged transaction. Adjustments to the conversion rate applicable to the Debentures may result in a taxable distribution to a holder of Debentures. Conversion or repurchase of Debentures into or with our common stock will dilute the ownership interests of other stockholders. In addition, to the extent that outstanding options to purchase shares of our common stock are exercised, there will be further dilution. Our stock price may be volatile due to the nature of our business as well as the nature of the securities markets, which could affect the value of an investment in our common stock, the Debentures or the Senior Notes.

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931148--3/16/2006--GRAFTECH_INTERNATIONAL_LTD