Extreme Motorsports Appeals to Shareholders to Assist in Combating Naked Short Selling

BAKERSFIELD, Calif.--Extreme Motorsports of California, Inc. (OTC:ETMO) (“Extreme” or the “Company”) is appealing to shareholders to participate in an effort management believes will significantly increase shareholder value and create a “share vacuum” for illegal naked short sellers. Extreme is asking loyal and long-term shareholders to request physical delivery of their shares in certificate form or, at the very least, request that their brokers not lend out shares to other brokerage firms. The Company is optimistic that, with the support of shareholders, this effort will dramatically reduce the electronic free-trading float and cause a naked short “squeeze” of unprecedented proportions.

Over the past few weeks, Extreme has been ordering a variety of non-objecting beneficial owner (NOBO) lists and Security Position Reports from the Depository Trust Company (DTC Sheets). As a result of this investigatory process, the Company has identified certain brokerages and clearing agents that are not filling orders and holding back significant blocks of ETMO stock. These blocks of stock exceed the current freely trading float by an estimated 600 million shares. To combat this increasing problem, Extreme is asking its loyal shareholder base to assist the Company in forcing the naked short sellers to cover their positions.

In a message to all loyal shareholders, Alan McCaa, President and CEO of Extreme Motorsports, provided additional details behind the rationale shareholders requesting physical delivery of their shares or that their free trading position held in “street name” not be lent out to other brokerage firms for the purposes of covering even legitimate short positions:

“As many of our 1,930+ shareholders know, we have been battling both illegal naked and short selling for months. It began on February 7, 2007 when, in a matter of a few short days, naked short sellers caused a runaway decline in the quote price of stock, in one case by selling over 88 million shares in a single day. And by the way, these 88 million shares didn’t actually exist.

“The evidence we have collected to date confirms that shares held in free-trading electronic positions by our shareholders are being 'lent out' by brokers to other market insiders or that, via naked short selling, cumulative brokerage balances of ETMO common stock are negative. This situation exists despite securities laws mandating three-day settlement. In addition, according to the most recent reports, there are around 25 large brokerages and clearing houses that are holding significant amounts of stock and have held these amounts for months. We estimate that these positions represent approximately 600 million shares more than free-trading float.

“We believe this pattern is an endemic, systematic naked short selling conspiracy and is designed to prevent a stock from ever recovering, thus increasing the amount of money market insiders, such as brokerages and traders, take out of the hands of legitimate shareholders. It is a deliberate, unethical, and self-fulfilling scheme that victimizes shareholders. For Extreme’s management, it has been a continuous battle, hamstringing our valuable resources from focusing on what really will increase shareholder value: building and selling the greatest off-road vehicles on earth.

“For all of these reasons, we are appealing to all long-term shareholders to call their brokers and demand physical delivery of their shares in certificate form. If shareholders do not want to request this, at the very least it would be helpful to the Company if shareholders can request their brokers not lend out their shares held in street name.

“Extreme is appealing to shareholders to participate in this effort as management believes it will (i) force unethical brokerages and traders to cover their short positions and fill legitimate shareholder orders that continue to remain open, and (ii) reduce the electronic free-trading float significantly, perhaps by hundreds of millions of shares depending on shareholder participation, to further mitigate the ability of brokerages to use your shares to lend to other brokerages and traders or mask their short positions.

“When shareholders request physical delivery of their shares, they note that the process should be completed in matter of 5 to 10 business days. Our transfer agent is standing by to ensure rapid turnaround of their requests for physical delivery. We have come to find out from speaking with shareholders that brokerages are currently estimating 6 to 10 weeks to deliver physical certificates. This is an artificial lead time and we urge all shareholders to ask to speak to customer support supervisors, managers or the compliance department at their brokerage firms if they are told this outrageous time frame. We believe this loaded time frame has been created by many brokerages to allow a sufficient number of days for their traders to cover short positions without creating demand for our common stock and, therefore, raising the quoted price in the market. Again, this is an unethical means of making money from Extreme’s shareholders.

“I have spoken with many shareholders who are loyal to our company and willing to participate in this physical certificate delivery request effort immediately, but I must emphasize that it is strictly optional. As the CEO of Extreme Motorsports, I also need to make it very clear that the Company, its board and management are unequivocal in believing a reverse stock split would not be helpful in solving the naked short problem. Reverse stock splits have been tried by companies in similar situations and resulted in little change or a further decline in the overall value of the company’s common stock. We believe that, in addition to our long-term strategy to protect our common stock under trademark and copyright protection, this short term effort our shareholders can help us undertake will increase overall shareholder value.

“I would like to take this opportunity to thank all of our loyal shareholders for their support and look forward to working together to end the naked short selling of ETMO.”

About Extreme Motorsports of California, Inc.

Extreme Motorsports of California, Inc., operating under the trade name “Xtreme Motorsports,” is a manufacturer of custom and production-line sandrails, desert and dual sport racecars. Founded in 1983, Xtreme’s sandcars have been sold to customers in England, the United Arab Emirates, Australia, South America and the US. For more information, visit the corporate web site www.xmssandcars.com.

Forward-Looking Statements

Certain statements in this release, and other written or oral statements made by the Company, including the use of the words "expect," "anticipate," "estimate," "project," "forecast," "outlook," "target," "objective," "plan," "goal," "pursue," "on track," and similar expressions, are "forward-looking statements" and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements of the company to be different from those expressed or implied. The Company assumes no obligation and does not intend to update these forward-looking statements and takes no obligation to update or correct information prepared by third parties that are not paid for by the Company.