Xybernaut (XYBRQ) 8-K Regulation FD Disclosure

EXHIBIT 99.2

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION

In re:		)	Case No. 05-12802 RGM
		)
XYBERNAUT SOLUTIONS, INC.		)
		)	Chapter 11
	Debtor.	)
		)

MONTHLY OPERATING REPORT Calendar MonthAug 1, 2005 toAug 31, 2005

FINANCIAL BACKGROUND INFORMATION

     1. ACCOUNTING BASIS: Casho Accrualþ

     2. PREPARER: State the names address, telephone number and position of the person(s) who actually compiled the information contained in this report.

     Ed Maddox, President XSI, 11591 Greenwich Point Road, Reston Va 20194

     Vincent Mencher, Temporary Accounting Support, Acsys, Inc. 12120 Sunset Hills Road, Reston, Va 20190

     Elizabeth Norton, Temporary Accounting Support, Acsys, Inc. 12120 Sunset Hills Road, Reston, Va 20190

     3. NUMBER OF EMPLOYEES paid during this period:20

     4. Have there been any CHANGES IN THE NATURE OF YOUR BUSINESS since the last reporting period? Yeso Noþ. If yes, explain below:

     5. Are all BUSINESS LICENSES current? Yesþ Noo Not Applicableo

     6. PRE-PETITION ACCOUNTS RECEIVABLE:

Beginning Balance	$	537,612.60
Collected this Period	$	339,586.39
Ending Balance	$	198,026.21

     7. POST -PETITION ACCOUNTS RECEIVABLE:

0-30 Days: $423,593.65 31-60 Days: $15,000.00 Over 60 Days: $0.00

     If there are anypost-petition Accounts Receivable over 60 days provide Schedule AR giving a listing of such accounts and explain the delinquencies.

     NONE

     8. POST –PETITION ACCOUNTS PAYABLE:

0-30 Days: $47,744.69 31-60 Days: $40,733.95 Over 60 Days: $0.00

     If there are anypost-petition Accounts Payable over 30 days, provide Schedule AP giving a listing of such accounts and explain the delinquencies.

PAYEE	AMOUNT		COMMENT
8618 Westwood Center Drive	$	10,828.86	Lease will be automatically rejected.
Dennis Dyer	$	11,274.14	Delay caused by oversight, reduced accounting staff - paid on 9/13
PM Expressions	$	11,520.00	Delay caused by oversight, reduced accounting staff - paid on 9/13
Primus	$	53.64	Delay caused by oversight, reduced accounting staff - paid on 9/13
Southwestern Bell	$	110.01	Delay caused by oversight, reduced accounting staff - paid on 9/13
Doug Werner	$	17,776.16	Delay caused by oversight, reduced accounting staff - paid on 9/13

     9. TAXES. Are all taxes being paid to the proper taxing authorities when due? Yeso Noþ. On the attached IRS Form 6123 report all tax deposits made with any financial institution for federal employment taxes. Be sure the form is complete and signed by an authorized employee of the receiving institution or taxing authority. Attach to this report a completed Form 6123 for each deposit made during the reporting period. Also attach copies of the monthly sales tax report, payroll tax report and unemployment tax report with evidence of payment ofboth federal and state taxes.

All taxes are paid by Xybernaut Corporation, Xybernaut Solutions, Inc’s parent company who is co-filing on this case. Xybernaut Corporation’s operations report will address the company’s current tax status.

     10. ESCROW ACCOUNTS. Are you utilizing your tax account only for deposit and payment of payroll and sales taxes? Yesþ Noo If no, explain:

     11. Are all BOOKS AND RECORDS of the debtor(s) being maintained monthly and are all current? Yesþ Noo Explain:The books and records are being maintained — however due to a complete turnover in our accounting staff, and the current use of temporary replacements, we have not yet closed our August books. It is anticipated that it will take until the end of September to close and reconcile the August figures. The figures in this report reflect the most current trial balance for August.

     12. INSURANCE EXPIRATION STATEMENT. Policy expiration dates are:

Type	Policy #		Policy Dates
Auto		93256759	3/31/05-3/31/06
Fire
General Liability		35392595	3/31/05-3/31/06
Excess/Umbrella Liability		79781303	3/31/05-3/31/06
Workers Comp		71714215	3/31/05-03/31/06
Errors & Omissions		35392595	3/31/05-3/31/06

     13. ACTIONS OF DEBTOR. During the last month, did the debtor:

(A) Fail to defend or not oppose any action seeking to dispossess the debtor from control or custody of any asset of the estate? Yeso Noþ Explain:                    

(B) Maintain such stock inventory, raw materials, insurance, employees and other resources as are necessary to preserve and maintain the going concern value of the assets of the debtor? Yesþ Noo Explain:                                        

     14. TRANSFER OR SALE OF PROPERTY. Did the debtor or any person with control over any of the debtor’s assets transfer, convey or abandon any of the debtor’s assets to another party during the period of this report other than as set forth herein (including sales by creditors)?

Yeso Noþ Explain:                                        

     15. PAYMENT TO SECURED CREDITORS during reporting period: (Attach additional sheets if necessary)

	Frequency of	Amount	Next	Post-Petition
	Payments per	of Each	Payment	Pmts. No Made
Creditor	Contract (mo. Qtr)	Payments	Due	No. Amt.
NONE

     16. PAYMENTS TO PROFESSIONALS (Attorneys, Accountants, Real Estate Agents, Auctioneers, Appraisers, etc., during reporting period: (Attach additional sheets, if necessary):

Professional	Service	Amount
NONE

     17. QUARTERLY U.S. TRUSTEE FEES paid during reporting period:$ 0.00

     18. VERIFICATION: I declare under penalty of perjury that the information contained in this monthly operating report (including attached schedules) is true and correct to the best of my knowledge, information and belief.

Dated:September 20, 2005		DEBTOR-IN-POSSESSION
Name/Title:	/s/Edward P. Maddox, President	Xybernaut Solutions, Inc.
Address: 11591 Greenwich Pt. Rd		12701 Fair Lakes Circle, Suite 160,
	Reston, Va 20194	Fairfax, Va 22033
		Phone: 703-654-3595

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION

In re:	) )	Case No. 05-12802 RGM
XYBERNAUT SOLUTIONS, INC.	)
	)	Chapter 11
	)
Debtor.	)

Cash Disbursements Summary Report

Calendar Month Ending August 31, 2005

Total Disbursements from Operating Account	(See Note 1)	447,147.19
Total Disbursements from Payroll Account	(See Note 2)	158,942.06
Total Disbursements from Tax Escrow Account	(See Note 3)	- N/ A -
Total Disbursements from any other Account	(See Note 4)	- N/ A -
Grand Total Disbursements from all Accounts		606,089.25

Note 1 — Include in this amount all checks written, wire transfers made from, or any other withdrawal from the general operating account. Exclude only transfers to the debtor-in-possession payroll account, the debtor-in-possession account tax escrow account or other debtor in possession account where the disbursements will be listed on this report.

Note 2 — Include in this amount all checks written, wire transfers made from, or any other withdrawal from the payroll account. Exclude only transfers to the debtor-in-possession operating account, the debtor- in-possession tax escrow account or other debtor-in-possession account where the disbursements will be listed on this report.

Note 3 — Include in this amount all checks written, wire transfers made from, or any other withdrawal from the tax escrow account. Exclude only, transfers to the debtor-in-possession operating account, the debtor-in-possession payroll account or other debtor-in-possession account where the disbursements will be listed on this report.

Note 4 — Include in this amount any other disbursements made by the debtor including (but not limited to) cash paid from a petty cash fund or cash register, amounts paid from any other debtor-in-possession account, and amounts paid from the accounts of others on the debtors behalf (for example disbursements made from a law firm’s escrow account as a result of a sale of property.)

ATTACH A COPY OF THE MOST RECENT MONTHLY BANK STATEMENT FOR EACH DEBTOR- IN-POSSESSION ACCOUNT.

In re:Xybernaut Solutions, Inc.                            Case Number:05-12802

BALANCE SHEET
As of August 31, 2005

Current Assets
Cash	$	251,425.91
Pre-Petition Accounts Receivable		198,026.21
Post-Petition Accounts Receivable		438,593.65
Receivables from Officers		—
Employees, Affiliates
Note Receivables		—
Inventory		—
Other Current Assets:
Due to / From Xybernaut		423,799.16
Unbilled Accounts Receivable		372,769.34
Prepaid Other		21,141.01
Accounts Receivalbe Other XSI		337.00
Employee Advances		(287.00	)
Total Current Assets				1,705,808.28
Fixed Assets
Land	$	—
Buildings		—
Equipment, Furniture & Fixtures		425,790.48
Less Accumulated Depreciation		(341,878.93	)
Total Fixed Assets				83,911.55
Other Assets
Retainage		22,738.00
Deposits		6,750.10
Total Other Assets				29,488.10
Total Assets				1,819,207.93
Post-Petition Liabilities
Accounts Payable		88,478.64
Salaries Payable		71,809.20
Commissions Payable		332.64
Accrued Vacation		74,035.76
Accrued Rent & Storage		16,236.13
Taxes Payable		207.66
Accrued Interest
Deferred Revenue		139,015.01
Total Post-Petition Liabilities				390,115.04
Pre-Petition Liabilities
Priority Claims		21,888.15
Secured Debts		0.00
Unsecured Debtor		26,523.99
Total Pre-Petition Liabilities		48,412.14
Owners Equity (Deficit)
Capital Stock or Owner Investment		15,849.68
Paid In Capital Surplus		605,059.88
Retained Earnings (Deficit)
Pre-Petition		762,123.22
Post-Petition		2,352.03
Total Owners Equity				1,380,680.75
Total Liabilities and Owner’s Equity				1,819,207.93

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION

In re:	)	Case No. 05-12802 RGM
	)
XYBERNAUT SOLUTIONS, INC.	)
	)	Chapter 11
Debtor.	)

MONTHLY OPERATING REPORT
INCOME STATEMENT
(Business Debtor, Accrual Basis)
Calendar Month August 1 to August 31, 2005
(All figures refer topost-petitiontransactions)

	This Month		Year to Date
(A) Total Sales/Income                                                                                 (A)		258,738.75		258,738.75
Cost of Sales
Beginning Inventory		—		—
Purchases of Inventory		—		—
Less Ending Inventory		—		—
Direct Labor (Gross Salaries)		62,972.11		62,972.11
Purchased Services		47,201.54		47,201.54
(B) Total Cost of Sales (B)		110,173.65		110,173.65
(C) Gross Profit (C= A-B)		148,565.10		148,565.10
Operating Expenses
Officers Salaries (Gross)		15,416.68		15,416.68
Other Employee Salaries (Gross)		28,108.26		28,108.26
Taxes (Payroll: Employer’s Share)		9,925.81		9,925.81
Employee Benefits (Insurance, Pension, Plan, etc. Employer’s Share)		32,256.06		32,256.06
Advertising		—		—
Bad Debts		—		—
Depreciation and Amortization		5,670.15		5,670.15
Entertainment		—		—
Insurance (Real Estate)		—		—
Insurance (Other)		182.01		182.01
Interest (Mortgage, Loans, etc.)		—		—
Leases (other than Rent)		—		—
Outside Services & Contractors		11,984.71		11,984.71
Professional Fees (Attorney, Accountant)		—		—
Rent and leases		8,629.10		8,629.10
Repairs and Maintenance		—		—
Supplies		642.94		642.94
Taxes (Real Property)		—		—
Taxes (Other)		—		—
Telephone		1,438.41		1,438.41
Travel		6,269.17		6,269.17
Utilities		—
U.S. Trustees Quarterly Fee

Case Number 05-12802                                          Period Ending                    Income Statement Page 2

	This Month			Year to Date
Other Operating Expenses
Overnight Delivery		523.27			523.27
Bank Fees		338.26			338.26
_______________________________
_______________________________
(D) Total Operating Expenses (D)		118,751.34			121,384.83
(E) Profit/Loss from operations (E= C-D)		29,813.76			27,180.27
Other Income (Expenses)
Interest Income
Interest Expense		(	)		(	)
________________________
________________________
________________________
________________________
Extraordinary Items – In (Out)
_________________________
_________________________
_________________________
_________________________
(F) Total Other Income/Expense & Extraordinary Items (F)		—			—
(G) Income Before Taxes (G= E+F)		29,813.76			27,180.27
(H) Income Tax Expense (H)
(I) Net Income (Loss) (I= G-H)		29,813.76			27,180.27

          NOTE: Accrual basis reporters must attach Cash Reconciliation Reports or a standard Statement of Sources and Uses of Case to this Report.

In re:Xybernaut Solutions, Inc. Case Number:05-12802

CASH RECONCILIATION REPORT
(Business Debtor, Accrual Basis)
Calendar Month Ending August 31, 2005
(All figures refer to post-petition transactions)

	Operating Account			Totals
(A) Beginning Cash Balance (A)					78,791.75
(B) Net Income, (line (I), Form 9-BA) (B)					27,180.27
Add Expenses Not Requiring Cash Depreciation:		4,498.02
(C) Sub-Total (C)					4,498.02
(D) Cash from Operations (D = B + C)					31,678.29
Other Sources (Uses) of Cash:
Sources       (Uses)
Decrease       (Incr.) – Accounts Receivable		139,534.08
Decrease       (Incr.) – Due to / From Xybernaut, Inc.		(32,480.79	)
Decrease       (Incr.) – Prepaid & Other Current Assets		4,715.47
Decrease       (Incr.) – Equipment		1,420.80
Decrease       (Incr.) – Furniture & Fixtures		—
Decrease       (Incr.) – Software		—
Decrease       (Incr.) – Payroll Account		(2,205.67	)
Increase       (Decr) – Accounts Payable		24,213.62
Increase       (Decr) – Accrued Interest		0.00
Increase       (Decr) – Accrued P/R Taxes
Increase       (Decr) – Accrued Prof. Fees
Increase       (Decr) – Accrued Rent		8,629.10
Increase       (Decr) – Accrued Salaries		2,497.10
Increase       (Decr) – Accrued Commissions		(10,013.76	)
Increase       (Decr) – Accrued Vacation		11,947.74
Increase       (Decr) – Accrued Sales Taxes
Increase       (Decr) – Notes Payable – Banks
Increase       (Decr) – Notes Payable – other		(17,407.53	)
Increase       (Decr) – Deferred Revenue
Increase       (Decr) – (Less) Unrecorded bank service charges
(E) Total other Sources (Uses) of Cash (E)					130,850.16
(F) Ending Cash Balance (F= A+D+E)					241,320.20
(G) Balance per Bank Statement (G)					270,585.21
(H) Less Outstanding Checks (H)		29,265.01
(I) Add Deposits in Transit (I)
(J) Reconciled Bank Balance {J=(G-H) +I}					241,320.20

Ending Cash Balance (F) and Reconciled Bank Balance (J) should equal.

     In re:Xybernaut Solutions, Inc. Case Number:05-12802

CASH RECONCILIATION REPORT
Payroll and Tax Accounts

(Business Debtor, Accrual Basis)
Calendar Month Ending August 31, 2005
(All figures refer to post-petition transactions)

	Payroll		Tax
	Account		Account
(A) Beginning Cash Balance (A)
Cash Receipts:		7,900.04
Transfers from Operating Account		156,140.84
Transfers from Payroll Account
Other —
(B) Total Cash Receipts (B)		156,140.84
(C) Cash Available (C= A+B)		164,040.88
Cash Disbursements:
Gross Payroll for this period      $146,747.00
Employee Benefits paid
Net Payroll Paid		7,623.84
Transfers to Tax Account		103,955.21
Taxes deposited or paid during period
Employee’s share of FICA Tax		9,143.26
Employer’s share of FICA Tax		9,143.26
Employee’s Federal Income Tax		17,234.00
Employee’s State Income Tax		5,147.18
Unemployment Tax		795.21
Unrecorded Bank Service Charges		0.00
Other:		893.31
(D) Total Disbursements (D)		153,935.27
(E) Ending Cash Balance (E= C-D)		10,105.61
(F) Balance per Bank Statement (F)		14,010.05
(G) Less Outstanding Checks (G)		3,904.44
(H) Add Deposits in Transit		0.00
(I) Reconciled Bank Balance {I = (F-G) +H]		10,105.61

Ending Cash Balance (E) and Reconciled Bank Balance (I) should