Reasons why slipping, from most likely to least likely, are:
1) Adjusted too far out
2) Springs are too weak - Replace springs
3) Worn clutch disks - Replace thin disks
4) Glazed plates and/or disks - rough up with 400 grit paper
5) Warped clutch plates - Replace warped plates
6) Poor oiling - drill more holes in centre, unclog passages
7) Crack in clutch pressure plate - Replace pressure plate
8 ) Worn clutch throwout mechanism - Replace clutch inner cover / mechanism
Clutch adjustment and to some extent condition of the clutch cable and throwout mechanism determine whether the clutch engages early (just as you begin to squeeze the upper lever) or late (upper lever almost touching the handlebars)
- Lube cable, adjust per manual ensuring 1/4 turn out from just touching
Edit: K2 was a transition year for clutch design, so ensure you have the right components for your particular clutch.