Xethanol's X-Factor

First, does its technology really work? And second, is its management really as "evil" as short-sellers like to claim?

Xethanol's regulatory filings offer some troubling clues about the first. Notably, Xethanol has by now written off $3.64 million worth of technologies acquired under four different licensing agreements.

"Although the company anticipates further development and testing of the technologies, as well as new technologies and opportunities that may evolve from these relationships," Xethanol's second-quarter report states, "given the pre-commercial stage of these technologies and the uncertainties surrounding both the ultimate commercial deployment of the technologies and the timing and amounts of any cash flows related to such deployment, the company determined an impairment loss should be recognized."

To be fair, Xethanol could have written off one of its prospects too soon. The company lists its license agreement with Xylose Technologies among its impaired assets. But as recently as last week, the scientist behind that project assumed it was still on track.

Thomas Jeffries, a government inventor with university ties, recently sent an email to TheStreet.com offering to discuss his work for Xethanol. Within days, however, he had withdrawn his offer because he was advised not to talk.