Xethanol: Just When it Seemed Things Were Looking Up...

Xethanol Corp. (XNL) has undoubtedly been shrouded in controversy since the Sharesleuth report. It appeared, though, as if the company and its shareholders had overcome this negative media attention, as the stock shot up 35.2% from Sep-26th to Oct-24th. But just when they thought they were out, they got pulled back in. The Sharesleuth report has come back to haunt XNL in various forms of lawsuits. XNL, as a result, has suffered a reversal in the past three days declining 22.4% to $2.93 a share.

Three law firms are accusing Xethanol of:

1. Misrepresenting management's experience and standard of ethics
2. Omitting disclosing a series of related-party transactions and association with investors who had alarming records of stock fraud and related shareholder abuses
3. Materially overstating 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. Lacking 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
5. Causing plaintiffs and other Class members to purchase Xethanol common stock at artificially inflated prices

These lawsuits are on behalf of shareholders who "purchased, exchanged or otherwise acquired" the common stock of XNL between January 31st, 2006 and August 8th, 2006. Skeptics believe these lawsuits have different intentions as a poster on the Yahoo! Xethanol Message Board said, "Why sue myself...How much money do you expect to get from a class action lawsuit when Xethanol itself is one of the defendants? As a shareholder of Xethanol, you are ALSO a defendant." The shareholders who may participate in this class action lawsuit will most probably receive very little money, as the more shareholders that join the larger the dilution. Lawyers on the other hand, if successful, will be the "winners." When filing the lawsuits, the lawyers didn't even have to do their own research; their reasoning is directly from the Sharesleuth report. Are the lawyers actually trying to protect the shareholders? Or are they manipulating Xethanol's vulnerability? Nevertheless XNL's image is once again questioned.

Xethanol claims that these lawsuits are without merit as they briefly rebut this in a previous article. Xethanol, though, should do a better job in convincing shareholders that they are reliable. "Keeping quiet" shows their inability to disprove these lawsuits. Though this negative attention is creating pessimism, the declining price can be an excellent buying opportunity. If the lawsuit is not able to succeed, then shareholders can put the past behind them.

Comments

[ziopaperone:]

Hummm.... I have read all the several Class Action press releases, and none of them have a lead plaintiff...
The guy owner of that web site blog says he invested more than $1M by selling short XNL securities. Also on the blog he claims (or claimed, maybe now he deleted this) to have contacted a lawyer.
Now, to send out a press release does not cost so much. I am not saying that there are connections, but the costs to deposit a class action and to send a press release are very low compared by the volume of XNL securites exchanged every day.
From what I can find, XNL elected on the board Mr. Behrens, an Official for the American Stock Exchange: I know this can not be a guarantee for good results, but I trust it could be for compliance with the law.
Also, they recently dedicated a new plant in Augusta, Georgia:

biz.yahoo.com/bw/06083...
with the Augusta Mayor:

www.wrdw.com/politics/...
In case this is fake, it is really good.
Of course some more action from XNL would be welcome, but maybe they don't want to advertise Sharesleuth more.

2006 Oct 30 04:55 PM