Xybernaut
Encyclopedia
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.
The company was headquartered in Fairfax, Virginia
, until 2006, when it moved to Chantilly, Virginia
.
in 1996 under the new name, Xybernaut, .
It subsequently posted 33 consecutive quarterly losses, despite repeated promises by the Newmans that profitability was right around the corner.
In mid-1998, former Virginia governor George Allen joined the company's board of directors. 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.
In September 1999, the company's board dismissed its accounting firm, PricewaterhouseCoopers
, which had issued a report with a "going concern" paragraph that questioned the company’s financial health. This was just one of many signs that the Newman brothers discouraged transparency in company accounting practices.
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." In January 2007, Xybernaut emerged from bankruptcy protection, following a reorganization.
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. Also included in the indictment is Andrew Broawn, the former President and CEO of Ramp, Inc. Investors who were fleeced by the company and its executives continue to wait for justice to be served and the Israeli businessmen extradited and the Newman brothers sent to prison.
Wearable computer
Wearable computers are miniature electronic devices that are worn by the bearer under, with or on top of clothing. This class of wearable technology has been developed for general or special purpose information technologies and media development...
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.
The company was headquartered in Fairfax, Virginia
Fairfax, Virginia
The City of Fairfax is an independent city forming an enclave within the confines of Fairfax County, in the Commonwealth of Virginia in the United States. Although politically independent of the surrounding county, the City is nevertheless the county seat....
, until 2006, when it moved to Chantilly, Virginia
Chantilly, Virginia
Chantilly is an unincorporated community located in western Fairfax County and southeastern Loudoun County of Northern Virginia. Recognized by the U.S. Census Bureau as a census designated place , the community population was 23,039 as of the 2010 census -- down from 41,041 in 2000, due to the...
.
Early history
The company was originally founded in 1990 as Computer Products & Services Incorporated (CPSI) by Edward G. Newman. In 1994, Newman's brother, Steven A. Newman became the president of the company. The company had is Initial public offeringInitial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
in 1996 under the new name, Xybernaut, .
It subsequently posted 33 consecutive quarterly losses, despite repeated promises by the Newmans that profitability was right around the corner.
In mid-1998, former Virginia governor George Allen joined the company's board of directors. 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.
In September 1999, the company's board dismissed its accounting firm, PricewaterhouseCoopers
PricewaterhouseCoopers
PricewaterhouseCoopers is a global professional services firm headquartered in London, United Kingdom. It is the world's largest professional services firm measured by revenues and one of the "Big Four" accountancy firms....
, which had issued a report with a "going concern" paragraph that questioned the company’s financial health. This was just one of many signs that the Newman brothers discouraged transparency in company accounting practices.
Fraud charges and bankruptcy
In February 2005, Edward and Steven Newman were subpoenaed by the Securities and Exchange Commission about sales of Xybernaut stock. An internal company audit described improper conduct by the brothers including charging the company for personal expenses, hiring family members without SEC notification, failing to inform the company's board about large transactions, and interfering with internal audits. In April 2005, they were forced to resign. Following their ouster, the Board of Directors appointed Perry L. Nolen, previously president of Xybernaut's services subsidiary, as President and CEO of Xybernaut.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
Tesco
Tesco plc is a global grocery and general merchandise retailer headquartered in Cheshunt, United Kingdom. It is the third-largest retailer in the world measured by revenues and the second-largest measured by profits...
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." In January 2007, Xybernaut emerged from bankruptcy protection, following a reorganization.
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. Also included in the indictment is Andrew Broawn, the former President and CEO of Ramp, Inc. Investors who were fleeced by the company and its executives continue to wait for justice to be served and the Israeli businessmen extradited and the Newman brothers sent to prison.