KKR Financial (KFN)

We may not be able to maintain the listing of our common shares with the New York Stock Exchange.

        On December 30, 2008, we received written notice from the NYSE that we had fallen below the continued listing standard regarding price criteria for common shares under Section 802.01C of the NYSE's Listed Company Manual. Section 802.01C requires that our common shares have a minimum average closing price of $1.00 per share during a consecutive 30-day trading period. Under the NYSE's applicable rules and regulations regarding listed security average closing price, we have 6 months from the date of the notice to bring the average closing price of our common shares back above $1.00 during a consecutive 30-day trading period. There can be no assurances that we will be able to maintain our listing.

        If our common shares are delisted from the NYSE, they may trade in the over-the-counter market. Securities traded in the over-the-counter market generally have significantly less liquidity than securities traded on a national securities exchange, through factors such as a reduction in the number of investors that will consider investing in the securities, the number of market makers in the securities, reduction in securities analyst and news media coverage and lower market prices than might otherwise be obtained. As a result, in the event of a delisting, holders of our common shares may find it difficult to resell their shares at prices quoted in the market or at all. Furthermore, because of the limited market and generally low volume of trading in our common shares that could occur, the share price of our common shares could be more likely to be affected by broad market fluctuations, general market conditions, fluctuations in our operating results, changes in the markets perception of our business, and announcements made by us, our competitors or parties with whom we have business relationships.

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Investors may also determine to exit our common shares as a result of the delisting of our common shares, which could depress the share price. In some cases, we may also be subject to additional compliance requirements under applicable state laws in the issuance of our securities. The lack of liquidity in our common shares may also make it difficult for us to issue additional securities for financing or other purposes, or to otherwise arrange for any financing we may need in the future.

We may not be able to maintain the listing of our common shares with the New York Stock Exchange.

        On December 30, 2008, we received written notice from the NYSE that we had fallen below the continued listing standard regarding
price criteria for common shares under Section 802.01C of the NYSE's Listed Company Manual. Section 802.01C requires that our common shares have a minimum average closing price of $1.00
per share during a consecutive 30-day trading period. Under the NYSE's applicable rules and regulations regarding listed security average closing price, we have 6 months from the
date of the notice to bring the average closing price of our common shares back above $1.00 during a consecutive 30-day trading period. There can be no assurances that we will be able to
maintain our listing.

        If
our common shares are delisted from the NYSE, they may trade in the over-the-counter market. Securities traded in the over-the-counter
market generally have significantly less liquidity than securities traded on a national securities exchange, through factors such as a reduction in the number of investors that will consider investing
in the securities, the number of market makers in the securities, reduction in securities analyst and news media coverage and lower market prices than might otherwise be obtained. As a result, in the
event of a delisting, holders of our common shares may find it difficult to resell their shares at prices quoted in the market or at all. Furthermore, because of the limited market and generally low
volume of trading in our common shares that could occur, the share price of our common shares could be more likely to be affected by broad market fluctuations, general market conditions, fluctuations
in our operating results, changes in the markets perception of our business, and announcements made by us, our competitors or parties with whom we have business relationships.

30

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Investors
may also determine to exit our common shares as a result of the delisting of our common shares, which could depress the share price. In some cases, we may also be subject to additional
compliance requirements under applicable state laws in the issuance of our securities. The lack of
liquidity in our common shares may also make it difficult for us to issue additional securities for financing or other purposes, or to otherwise arrange for any financing we may need in the future.