Xybernaut

» see xybernaut.com as it lived, on the wayback machine

~ the obit ~

Edward Newman founded the company in 1990 in Fairfax, Virginia, under the name Computer Products & Services Incorporated. His brother Steven became president in 1994. In 1996 it went public as Xybernaut, and spent the following decade selling the future: a computer you wore on your belt, a screen on a headband near your eye, hands free for whatever your actual job was. The products were real. The Mobile Assistant went to the US Army and to Tesco. The Poma, launched in 2002, was the consumer attempt.

The Poma is the thing people remember, and not kindly. It weighed over three pounds between unit and headset, and wearing one made you look like you had lost a bet. Complex named it among the fifty worst fails in tech history in 2011. Wearable computing was a reasonable bet in 2002 and remains a reasonable bet; the specific execution was heavy and expensive at exactly the moment phones were about to get light.

Underneath the hardware story sat a much stranger financial one. The Washington Post counted 33 consecutive quarterly losses, each accompanied by assurances from the Newmans that profitability was close. In September 1999 the board fired PricewaterhouseCoopers after the auditors attached a going-concern paragraph questioning the company's health.

Nothing about Xybernaut was aimed at a person like me, and that was by design. Xybernaut sold to warehouses and armies, through salespeople, at prices that never appeared on a shelf. A product like that reaches somebody like me only as a press photograph of a man with a screen strapped near his eye, filed under what computers were supposedly about to become.

~ the rap sheet ~

~ thirty three quarters ~

A company can lose money for eight years if somebody keeps funding it, and the funding is where this turns criminal. In October 2007 the Newmans were indicted in Brooklyn along with Xybernaut's former general counsel, Martin Weisberg. The indictment alleged they caused the company to issue hundreds of millions of shares below market price to two Israeli businessmen, Zev Saltsman and Menachem Eiten, who paid the executives millions of dollars in secret kickbacks.

That is the engine behind the 33 quarters. The losses were not a company struggling toward a breakthrough; they were a company whose share issuance was the product. Saltsman settled in July 2010 and forfeited $5 million by order of a judge, $4.5 million of which was earmarked for former shareholders.

~ the governance ~

The governance detail that aged worst involves George Allen, the former Governor of Virginia, who joined the Xybernaut board in mid-1998 and stayed until December 2000, resigning after his election to the US Senate the previous month. Over 1998 and 1999 his law firm, McGuire Woods, billed Xybernaut $315,925. He held 110,000 options worth about $1.5 million at their peak and never exercised them; they expired 90 days after he left the board.

The end came quickly once the SEC moved. The brothers were subpoenaed in February 2005 over their own stock sales. An internal audit described charging personal expenses to the company, hiring family members without disclosing it, keeping large transactions from the board, and interfering with the audits themselves. They were forced out in April. On 12 May 2005 Nasdaq delisted the stock, citing a sub-dollar share price and a late annual report, with public interest concerns alongside. The Chapter 11 petition followed in late July, with the company weighing a sale of some $40 million in assets.

~ the stub years ~

Xybernaut emerged from reorganization in January 2007, and this is where the public record stops rather than where the trail does. Its final filing with the SEC is a Form 15-12G dated 3 January 2007, terminating the registration of its securities. In the nineteen years since, nothing. No annual report, no 8-K, no notice of dissolution.

The website outlived the filings by seven years. Captures from 2011 through March 2014 show an unchanged page describing Xybernaut Corporation as "a leader in the research and development, manufacture and marketing of mobile and wearable computing systems," still dating itself to 1990, still linking to a product page. By July 2014 the domain served nothing. Today it answers with 114 bytes.

One more date needs correcting, because the encyclopedias file Xybernaut under 2017 disestablishments. The 2017 event is a final judgment entered against Edward G. Newman on 25 January, barring him from serving as an officer or director of a public company. That is a sanction on a person, ten years after the company it concerns had already stopped telling anyone it existed.

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