Xethanol and certain of its officers and directors are charged with issuing a series of materially false and misleading statements in violation of Section 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. Throughout the Class Period, Xethanol repeatedly assured investors that it could sustain itself on revenue from corn ethanol production while successfully commercializing biomass ethanol production. In fact, however, as investor have now learned, Xethanol was suffering from a host of undisclosed adverse factors that negatively impacted its business and it appears that they do not have the ability to commercialize biomass ethanol in the foreseeable near term. As investors learned the truth about Xethanol, shares of the Company declined precipitously – falling from a Class Period high of over $15 per share in April 2006, to less than $4.00 per share by the end of the Class Period. While shares of Xethanol were artificially inflated during the Class Period, certain insiders where able to liquidate millions of dollars of their personally held Xethanol shares.

Particularly, the complaint alleges that Xethanol: (1) misrepresented management’s experience and standard of ethics; (2) omitted disclosing a series of related party transactions and association with investors who had alarming records of stock fraud and related shareholder abuses; (3) materially overstated the Company’s profitability by under-reporting the true costs associated with completing a biomass to ethanol production facility, and by failing to make proper adjustments to the Company’s financial reports; (4) lacked any reasonable basis to assert that the Company was operating according to plan or could achieve the near-term commercialization of biomass ethanol production, or achieve the guidance sponsored and/or endorsed by the Company; and (5) caused plaintiffs and other Class members to purchase Xethanol common stock at artificially inflated prices.

If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. Any member of the purported class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. If you would like to discuss your legal rights, you may e-mail or call KGS, without obligation or cost to you. You may contact Managing Partner Lewis Kahn of KGS direct, toll free 1-866-467-1400, ext., 100, or 504-648-1850, or by email at lewis.kahn@kglg.com.