KFx REPORTS MOST PROBLEMS SOLVED AT K-FUEL PLANT

In an Investor Update published in November, KFx Inc. said that although production from the first commercial K-Fuel plant, 95 percent owned and operated by KFx’s partner, Thermo Ecotek Corporation, is substantially behind the original schedule, it appears that virtually all significant problems have been identified and corrections to the plant have been substantially completed or are under way. Solutions to the remaining issues of tar and fines waste streams and product dusting are being actively resolved by plant management.

Plant operations are improving almost daily and good quality K-Fuel product has been produced over the last several months.

Political instability has delayed the proposed Indonesian K-Fuel project. It is expected that this project will be a high priority for Indonesia, however, because the intent is to produce product for export, which will generate hard currency for the troubled Indonesian economy.

Testing and feasibility analysis on the proposed project in Turkey to produce home heating fuel for domestic use using K-Fuel technology continues to progress and was expected to be completed in November. Results to date are positive and the outlook for this project in 1999 is favorable.

The upgrade facility went into operation officially in April after numerous delays.

On November 16 the company issued a public earnings statement for the third quarter of 1998. The company, which is still trying to turn itself from a development entity into a profitable corporation, had a net loss of $1.16 million for the quarter. That was down slightly from a loss of $1.22 million in the same 3 months of 1997.

The company’s goals with respect to K-Fuel for 1999 are to:



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