Xethanol Reports Record Second Quarter Revenues and Gross Profit.

NEW YORK -- Xethanol Corporation (AMEX:XNL) today announced financial results for the second quarter of 2006. The Company reported record sales of approximately $3.2 million on approximately 1.3 million gallons of ethanol sold. There were no sales during the second quarter of the prior year. The

Other highlights included in the Company's quarterly report are summarized below:

--Sales of common stock generate $42 million in cash

--$6.6 million of debt is converted into equity

--Expansion of management team and Advisory Board

--Acquisition of biomass gasification technology

--Investment in H2Diesel and licensed use of proprietary biodiesel additive

--Commenced expansion of Blairstown site to add 35 million gallons per year

--Agreed to acquire site in Georgia with plans to construct a 50 million gallons per year facility

--Agreed to acquire site in North Carolina with plans to adapt site to produce 35 million gallons per year

The Company reported basic and diluted net loss per share of $0.24 for the quarter versus $0.11 in the second quarter of the prior year. The net loss for the quarter was approximately $5.9 million versus approximately $1.5 million in the prior year quarter. Included in the current quarter net loss were non-cash charges totaling approximately $5.6 million. Non-cash charges consisted primarily of equity compensation and other equity related expenses.

Lawrence Bellone, CFO of Xethanol, commented: "Our quarterly results illustrate the Company's first step in our progression toward achieving profitable operating results. We have demonstrated our ability to generate increased gross profit as we continue to expand our ethanol production capacity."

Christopher d'Arnaud-Taylor, Chairman & CEO of Xethanol, commented: "Our strategy of acquiring dormant industrial facilities as a platform for developing new ethanol production capacity, as well as expanding on our current Blairstown, Iowa site, continues to be on track. With our announced acquisitions in Augusta, Georgia and Spring Hope, North Carolina, combined with the new plant development on our Blairstown, Iowa site, our planned production capacity has increased to 126 million gallons per year by the end of 2007."

For the six months ended June 30:

For the six months ended June 30, 2006, the Company reported sales of approximately $5.8 million on approximately 2.8 million gallons. Gross profit for the six months was $633,500 or 11.0% of sales. The net loss for the period was approximately $8.1 million versus approximately $4.5 million in the prior year six month period. Basic and diluted net loss per share was $0.46 compared to $0.33 in the prior year six month period. Included in the net loss for the six months for 2006 was approximately $6.4 million of non-cash charges. Non-cash charges consisted primarily of equity compensation and other equity related expenses.

About Xethanol Corporation

Xethanol Corporation's primary goal is to be a leader in the emerging biomass-to-ethanol industry. Xethanol's mission is to optimize the use of biomass in the renewable energy field and convert biomass that is currently being abandoned or land filled into ethanol and co-products. Xethanol's strategy is to deploy technologies that will extract and ferment the sugars trapped in these biomass concentrations. Xethanol's strategic value proposition is to produce ethanol and co-products cost effectively with ethanol plants located closer to biomass sources. Xethanol produces ethanol at its production facility in Blairstown, Iowa. For more information about Xethanol, please visit its website at http://www.xethanol.com. To receive information on Xethanol in the future, please click on the following link: http://www.xethanol.com/alerts.htm?b=1387&l=1

Forward-Looking Statements

Certain matters discussed in this press release are "forward-looking statements." These forward-looking statements can generally be identified as such because the context of the statement will include words, such as "expects," "should," "believes," "anticipates" or words of similar import. Similarly, statements that describe Xethanol's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties, including the financial performance of Xethanol, as appropriate, which could cause actual results to differ materially from those currently anticipated. Although Xethanol believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it cannot give any assurance that their expectations will be attained. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating any forward-looking statements. Certain factors could cause results and conditions to differ materially from those projected in these forward-looking statements, and some of these factors are discussed below. These factors are not exhaustive. New factors, risks and uncertainties may emerge from time to time that may affect the forward-looking statements made herein. These forward-looking statements are only made as of the date of this press release and Xethanol does not undertake any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.