Air Pollution Control Equipment Services, Coal

KF subsidiary to become exclusive reseller of ULTRAMAX optimization technology

MENTOR, Ohio, May 14, 2002 — Pegasus Technologies, Inc., a majority owned subsidiary of KFx Inc., a provider of optimization solutions for the electric power industry, today announced that it entered into an agreement with Ultramax Corporation to become the exclusive reseller of ULTRAMAX® sequential, empirical optimization technology into the North American and Western European power utility sector.

As part of this relationship with Ultramax Corporation, Pegasus is responsible for providing software solutions, installation services, maintenance and support to the existing ULTRAMAX user base in North America and Western Europe. Pegasus also acquires the rights to develop derivative products and to integrate ULTRAMAX technology within its current and future product offerings.

This working relationship provides the ULTRAMAX user community with direct access and a migration path to utilize and take full advantage of Pegasus’ services, software, and support. It allows generating companies to build on their current solutions and gain additional benefits from using the industry standard solutions from Pegasus.

“I am very pleased to be working with Pegasus, the recognized industry leader in combustion optimization, and I am confident that our client base will recognize significant competitive advantage through Pegasus’ combustion and control expertise and from the full-range of real-time optimization solutions offered by Pegasus,” said Carlos W. Moreno, CEO and founder of Ultramax Corporation.

“The addition of the ULTRAMAX technology to our optimization offering provides us with the ability to deliver a complete range of solutions within the power industry, and to accelerate delivery of solutions in a matter of a few weeks, a very important consideration as we approach the NOx season. The ULTRAMAX Method significantly broadens our target range of generating plants and industrial boilers, allowing us to address the smaller units that could not previously be economically implemented. It also provides the industry with a full suite of optimization strategies using our proven software solutions,” said Gary Nicholson, CEO of Pegasus.

“The addition of ULTRAMAX to our portfolio uniquely positions the Pegasus offering and reinforces our position in the marketplace. It provides us with capability to deliver the best solution at affordable prices in a cost conscious industry,” said Graham Bird, Director of strategic Alliances for Pegasus.

About Pegasus/KFx
Pegasus Technologies, Inc. is a provider of neural network based IT applications for the power generation market. The Pegasus OS 2001 suite of combustion optimization applications enables utilities to reduce emissions and increase efficiency of fossil fueled electric generating units. The Pegasus Technologies web site address is www.pegasustec.com . Pegasus Technologies is majority-owned by KFx Inc. (Amex: KFX – news). KFx provides total fuel solutions for the power industry. Its patented K-Fuel® process converts low heating value coal into clean, high-energy fuel. KFx’s web site address is www.kfx.com .

About Ultramax Corporation
Ultramax Corporation is a provider of sequential empirical optimization technology and methodology. Through partnerships in global markets and business segments, UMC works with customers in all industries to maximize business profitability through improved industrial process control adjustments. The UMC web site is www.umaxcorp.com . UMC is a privately held company with headquarters in Cincinnati, OH.