Xybernaut

Infobox_Company
company_type = Technology
company_name = Xybernaut Corporation
foundation = (1990)
location = Chantilly, Virginia, U.S.
homepage = [http://xybernaut.com/]

Xybernaut Corporation is a provider of wearable / mobile computing hardware, software and services, bringing communications and full-function computing power in a hands-free design. Its products included the Atigo tablet PC, Poma wearable computer, and the MA-V wearable computer. [Rich Smith, [http://www.fool.com/News/mft/2004/mft04102716.htm "Xybernaut's Hatchet Job: A Ghoulish Trick for Halloween] , "Motley Fool", October 27, 2004]

The company was headquartered in Fairfax, Virginia, until 2006, when it moved to Chantilly, Virginia.

Early history

Xybernaut was founded in 1990 by Edward G. Newman, whose brother Steven A. Newman joined the company four years later. The company was originally called Computer Products & Services, Incorporated (CPSI).

In 1996, the company changed its name to Xybernaut and went public. [ [http://www.prnewswire.co.uk/cgi/news/release?id=39883 "Xybernaut Corporation: New Name, New Web Site"] , May 28, 1996, press release] It then posted 33 consecutive quarterly losses, despite repeated promises by the Newmans that profitability was right around the corner. Ellen McCarthy, [http://www.washingtonpost.com/wp-dyn/articles/A6307-2005Apr20.html "Xybernaut Hid Gathering Storm In Bright Forecasts"] , "Washington Post", April 21, 2005]

In mid-1998, former Virginia governor George Allen joined the company's board of directors. [ [http://sec.edgar-online.com/1998/10/01/08/0000910680-98-000357/Section9.asp Xybernaut October 1, 1999 SB-2 SEC filing] ] He remained on the board until December 2000, resigning after he was elected a U.S. Senator the month before. In 1998 and 1999, McGuire Woods LLP, the law firm that Allen was a partner of, billed $315,925 to Xybernaut for legal work. Allen remained on the Xybernaut board until December 2000. He was granted 110,000 options of company stock that, at their peak, were worth $1.5 million, but he never exercised those options, which expired 90 days after he left the board.Garance Franke-Ruta, [http://www.prospect.org/web/printfriendly-view.ww?id=11861 "Just a Gigolo: In the go-go ’90s, George Allen sat on the board of a Virginia tech company. Now, the company faces several class-action suits and an SEC insiders probe"] , "American Prospect" magazine, issue date of September 12, 2006]

In September 1999, the company's board dismissed the company's accounting firm, PricewaterhouseCoopers, which had issued a report with a "going concern" paragraph that questioned the company’s financial health. [ [http://www.secinfo.com/drPan.69b.htm#171 Xybernaut SEC filing, Form 8-K, September 19, 1999] ] This was just one of many signs that the Newman brothers discouraged transparency in company accounting practices.

Fraud charges and bankruptcy

In April 2005, Edward Newman, then CEO, and his brother Steven, president and COO, were pushed out under accusations that they used company funds for personal expenses, employed family members without disclosing it to the SEC, failed to inform the board of directors about the finances of major deals, and interfered with a company audit committee investigation, accusations that shareholders had long made on internet messageboards for some time. Their ouster follows the company's receipt in February of a Securities and Exchange Commission subpoena concerning sales of Xybernaut stock and after an internal investigation reported that the firm’s CEO and his brother, the COO, had committed a variety of misdeeds. Following their ouster in April, 2005, the Board of Directors appointed Perry L. Nolen, previously president of Xybernaut's services subsidiary, to Xybernaut's top spot as President & CEO.

In July 2005, Xybernaut filed for bankruptcy reorganization. Xybernaut did have some success selling its technology to retail and hospitality customers such as grocery chain Tesco PLC, as well as government and military, including the U.S. Army. But Tim Shea, a senior analyst at Venture Development Corporation, said that "They've been sowing the seeds pretty well, but part of the problem is that they have this line of [wearable] products that were a little on the big and bulky side and had battery problems." [ Ellen McCarthy, [http://www.washingtonpost.com/wp-dyn/content/article/2005/07/26/AR2005072601753.html "Xybernaut Files For Bankruptcy Protection: Firm Considers Selling Its $40 Million in Assets"] , "Washington Post", July 27, 2005] In January 2007, Xybernaut emerged from bankruptcy protection, following a reorganization. [Press Release, [http://www.xybernaut.com/itemDetail.asp?categoryID=48&itemID=2714 "Xybernaut Corporation Announces Emergence from Chapter 11"] , "Xybernaut.com", January 11, 2007]

In October 2007, Edward and Steven Newman were indicted, along with Xybernaut's former General Counsel, Martin Weisberg, for securities fraud and money laundering in federal district court in Brooklyn, New York. The indictment alleges, among other things, that the Newmans and Weisberg caused Xybernaut to issue hundreds of millions of Xybernaut shares at below market prices to two Israeli business men who, in turn, paid them millions of dollars in secret cash kickbacks. The Israeli business men, Zev Saltsman and Menachem Eiten, were also indicted and are awaiting extradition to the United States. [Press Release, U.S. Attorney's Office, Eastern District of New York, [http://www.usdoj.gov/usao/nye/pr/2007/2007oct19.html "Three Executives, a Corporate Lawyer, and Two Investors Indicted For Securities Fraud and Related Charges"] ,October 19, 2007]

References

External links

* [http://www.xybernaut.com/ company website]