EXHIBIT 99.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION
| | | | | | |
In re: | | | ) | | | Case No. 05-12801 RGM |
| | | ) | | | Jointly Administered |
XYBERNAUT CORPORATION, et al., | | | ) | | | |
| | | ) | | | |
| | | ) | | | Chapter 11 |
Debtors. | | | ) | | | |
| | | | | | |
MONTHLY OPERATING REPORT | | | | | | Calendar Month9/1/05 to9/30/05 |
FINANCIAL BACKGROUND INFORMATION
1. ACCOUNTING BASIS: Cash Accrual x
2. PREPARER: State the names address, telephone number and position of the person(s) who actually compiled the information contained in this report.
Nancy Hogan, Xybernaut Corp. 12701 Fair Lakes Circle, Suite 550, Fairfax, VA 22033
3. NUMBER OF EMPLOYEES paid during this period: 11
4. Have there been any CHANGES IN THE NATURE OF YOUR BUSINESS since the last reporting period? Yes No X . If yes, explain below:
5. Are all BUSINESS LICENSES current? Yes x No Not Applicable
6. PRE-PETITION ACCOUNTS RECEIVABLE:
| | | | |
Beginning Balance | | $ | 255,465.21 | |
| | | |
Collected this Period | | | 32,493.85 | |
| | | |
Ending Balance | | $ | 222,971.36 | |
| | | |
7. POST -PETITION ACCOUNTS RECEIVABLE:
0-30 Days:$298,998.64 31-60 Days:$20,280.41 Over 60 Days:$27,700
If there are anypost-petition Accounts Receivable over 60 days provide Schedule AR giving a listing of such accounts and explain the delinquencies.
Caterpillar — MCE — $27,000 Payment received 10/12/05
Walt Disney World $700 unpaid balance inv $136,228.71 pd 135,528.71 contacting client for balance
8. POST —PETITION ACCOUNTS PAYABLE:
0-30 Days:$214,548.20 31-60 Days:$7,097.00 Over 60 Days:0
If there are anypost-petition Accounts Payable over 30 days, provide Schedule AP giving a listing of such accounts and explain the delinquencies.
James Ralabate $7097.00 — Disputed
| a. | | TAXES. Are all taxes being paid to the proper taxing authorities when due? Yes No x . 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. |
NOTE: Due to the resignation of Grant Thornton, the Xybernaut Corporation’s auditors and federal/state tax preparers along with the accounting staff and company CFO the year end tax returns have been delayed. Xybernaut will be submitting the required returns in a timely manner. No or little tax liability is expected due to the large NOL carry forward.
9. ESCROW ACCOUNTS. Are you utilizing your tax account only for deposit and payment of payroll and sales taxes? Yes x No If no, explain:
10. Are all BOOKS AND RECORDS of the debtor(s) being maintained monthly and are all current? Yes X No Explain:
NOTE: The accounting staff of XC had left the company by April 2005 at which time no monthly close for 2005 had been performed and in July 2005 the CFO resigned, all books and records are being maintained however there maybe updates / corrections over the next couple of months.
11. INSURANCE EXPIRATION STATEMENT. Policy expiration dates are:
| | | | | | | | | | | | |
Auto & Truck | | | 73256759 | | | | 03/31/05 | | | | 03/31/06 | |
Liability | | | 392595 | | | | 03/31/05 | | | | 03/31/06 | |
Workers Comp. | | | 1714215 | | | | 03/31/05 | | | | 03/31/06 | |
Errors & Omissions | | | 35392595 | | | | 03/31/05 | | | | 03/31/06 | |
D&O | | | ELU08861005 | | | | 04/14/05 | | | | 04/14/06 | |
D&O | | | 35529D0205 | | | | 04/14/05 | | | | 04/14/06 | |
D&O | | | 35389095BAL | | | | 03/31/05 | | | | 03/31/06 | |
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? Yes No x 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? Yes x No 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)?
Yes. No x Explain
15. PAYMENT TO SECURED CREDITORS during reporting period: (Attach additional sheets if necessary)N/A
| | | | | | | | |
Creditor | | Frequency of | | Amount | | Next | | Post-Petition |
| | Payments per | | of Each | | Payment | | Pmts. No Made |
| | Contract (mo. Qtr) | | Payments | | Due | | No. | Amt. |
16. PAYMENTS TO PROFESSIONALS (Attorneys, Accountants, Real Estate Agents, Auctioneers, Appraisers, etc., during reporting period: (Attach additional sheets, if necessary): NONE
| | | | |
Professional | | Service | | Amount |
| | | | |
| | | | |
17. QUARTERLY U.S. TRUSTEE FEES paid during reporting period:
$ 0 Accrued $3750.00 to be paid in October, 2005
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: | 10/21/05 | | DEBTOR-IN-POSSESSION |
| | | | | |
| | | | | | |
Name/Title: | /s/ Perry L. Nolen, CEO/President | | |
| | |
12701 Fair Lakes Circle, Suite 550 | | | | |
| | | | |
Fairfax, VA 22033 | | Phone: | | 703/654-3591 |
| | | | |
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION
| | | | | | |
In re: | | | ) | | | Case No. 05-12801 RGM |
| | | ) | | | Jointly Administered |
XYBERNAUT CORPORATION, et al., | | ) | | | |
| | | ) | | | Chapter 11 |
| Debtors. | | ) | | | |
| | | ) | | | |
Cash Disbursements Summary Report
Calendar Month Ending09/30/05
| | | | | | | | |
Total Disbursements from Operating Account (See Note 1) | | | 355,663 | | | | | |
| | | | | | | |
| | | | | | | | |
Total Disbursements from Payroll Account (See Note 2) | | | 101,347 | | | | | |
| | | | | | | |
| | | | | | | | |
Total Disbursements from Tax Escrow Account (See Note 3) | | | 0 | | | | | |
| | | | | | | |
| | | | | | | | |
Total Disbursements from any other Account (See Note 4) | | | 103 | | | | | |
| | | | | | | |
| | | | | | | | |
Grand Total Disbursements from all Accounts | | | | | | | 457,010 | (1) |
| | | | | | | |
(1) Xybernaut has only 1 bank account for Operations and Payroll — amounts listed separately for information purposes only.
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 Corporation, et al. Case Number:05-12801 Jointly Administered
| | | | | | | | |
Xybernaut Corporation | | | | | | | |
Balance Sheet | | | | | | | |
| | | | | | | |
XYBERNAUT CORPORATION | | 2005 | | | | | |
| | September 30 | | | | | |
ASSETS | | | | | | | | |
| | | | | | | | |
Current assets: | | | | | | | | |
Cash In Banks | | | 236,341 | | | | | |
Petty Cash | | | 300 | | | | | |
Restricted Cash | | | — | | | | | |
Pre Petition Accounts receivable | | | 222,971 | | | | | |
Post Petition Accounts receivable | | | 354,139 | | | | | |
Less AR — Other, Reserve, Contra | | | (499,939 | ) | | | | |
Inventory | | | 2,357,680 | | | | | |
Prepaid and other current assets | | | 820,872 | | | | | |
DTDF — Japan | | | 680,099 | | | | | |
DTDF — GmbH | | | 12,533,177 | | | | | |
DTDF — Gmbh R&D | | | 4,820,238 | | | | | |
DTDF — China | | | 286,197 | | | | | |
DTDF — XSI | | | ( 331,437 | ) | | | | |
DTDF — Korea | | | 293,924 | | | | | |
DTDF — RESERVE | | | (18,000,000 | ) | | | | |
| | | | | | | |
Total current assets | | | | | | | 3,774,563 | |
| | | | | | | |
| | | | | | | | |
Fixed assets: | | | | | | | | |
Property and equipment | | | 2,148,276 | | | | | |
| | | | | | | | |
Less: accumulated depreciation | | | (1,947,084 | ) | | | | |
| | | | | | | | |
| | | | | | | |
Total fixed assets | | | | | | | 201,192 | |
| | | | | | | |
| | | | | | | | |
Other assets: | | | | | | | | |
Investment in subsidiaries | | | 605,584 | | | | | |
Patents, net | | | 772,092 | | | | | |
Trademarks, net | | | 31,996 | | | | | |
Tooling, net | | | — | | | | | |
Other | | | 175,774 | | | | | |
| | | | | | | | |
| | | | | | | |
Total other assets | | | | | | | 1,585,446 | |
| | | | | | | |
| | | | | | | | |
| | | | | | | |
TOTAL ASSETS | | | | | | | 5,561,201 | |
| | | | | | | |
| | | | | | | | |
LIABILITIES AND EQUITY | | | | | | | | |
| | | | | | | | |
Post-Petition Liabilities Accounts payable | | | 221,645 | | | | | |
Accrued restructuring costs | | | 13,610 | | | | | |
Deferred product and warranty revenue | | | 226,864 | | | | | |
Accrued Professional fees | | | 232,377 | | | | | |
Accrued Purchases | | | 243,518 | | | | | |
Salaries/Commissions Payable | | | 120,331 | | | | | |
| | | | | | | | |
| | | | | | | |
Total Post Petition Liabilities | | | 1,058,345 | | | | | |
| | | | | | | |
| | | | | | | | |
Xybernaut Corporation | | | | | | | |
Balance Sheet | | | | | | | |
| | | | | | | |
XYBERNAUT CORPORATION | | 2005 | | | | | |
| | September 30 | | | | | |
Pre-Petition Liabilities | | | | | | | | |
| | | | | | | | |
Priority Claims | | | 120,322 | | | | | |
Secured Debts | | | — | | | | | |
Unsecured Debt | | | 1,622,079 | | | | | |
Accrued expenses | | | 479,672 | (1) | | | | |
| | | | | | | | |
| | | | | | | |
Total Pre Petition Liabilities | | | 2,222,073 | | | | | |
| | | | | | | |
| | | | | | | | |
| | | | | | | |
Total liabilities | | | | | | | 3,280,418 | |
| | | | | | | |
| | | | | | | | |
Stockholders’ equity: | | | | | | | | |
Common stock | | | 1,946,209 | | | | | |
Additional paid-in capital | | | 183,745,591 | | | | | |
Cumulative translation adjustment | | | 38,695 | | | | | |
Accumulated other comprehensive income (XSI) | | | 37,130 | | | | | |
| | | | | | | | |
Retained earnings, beginning | | | (171,411,927 | ) | | | | |
| | | | | | | | |
Current Retained Earnings — Pre Petition | | | (10,953,999 | ) | | | | |
Current Retained Earnings — Post Petition | | | (1,120,916 | ) | | | | |
| | | | | | | | |
| | | | | | | |
Total stockholders’ equity | | | | | | | 2,280,783 | |
| | | | | | | |
| | | | | | | | |
| | | | | | | |
TOTAL LIABILITIES AND EQUITY | | | | | | | 5,561,201 | |
| | | | | | | |
| | | | | | | | |
(1) Accrued Other major items: | | | | | | | | |
General — Miscellaneous | | | | | | $ | 150,000 | |
Ed & Steve Newman bonus 100,000 shares | | | | | | $ | 138,000 | |
Stale Checks | | | | | | $ | 39,234 | |
Vacation Accrual | | | | | | $ | 60,732 | |
Warranty Reserve | | | | | | $ | 75,900 | |
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION
| | | | | | |
In re: | | | ) | | | Case No. 05-12801 RGM |
| | | ) | | | Jointly Administered |
XYBERNAUT CORPORATION, et al., | | | ) | | | |
| | | ) | | | Chapter 11 |
Debtors. | | | ) | | | |
MONTHLY OPERATING REPORT
INCOME STATEMENT
(Business Debtor, Accrual Basis)
Calendar MonthSeptember 1, 2005 toSeptember 30, 2005
(All figures refer to post-petition transactions)
Case Number 05-12801 (Jointly Administered) Period Ending September 2005 Income Statement Page 1
| | | | | | | | |
| | Xybernaut Corporation | | | | |
| | Results of Operations | | | | |
| | Ending September 30, | | | | |
| | 2005 | | | | |
| | | | | YTD | |
| | Current | | | 2005 | |
Revenue: | | | | | | | | |
| | | | | | | | |
Sales/Income | | | 403,074 | | | | 748,889 | |
| | | | | | | | |
Cost of Sales | | | | | | | | |
| | | | | | | | |
Beginning Inventory | | | 3,146,071 | | | | 3,274,531 | |
Purchase of Inventory | | | 80,910 | | | | 240,290 | |
Less ending Inventory | | | (2,897,925 | ) | | | (2,897,925 | ) |
Direct Labor (Gross Salaries) | | | | | | | | |
Purchased Goods and Services | | | 35,462 | | | | 46,259 | |
| | |
Total Cost of Sales | | | 364,518 | | | | 663,155 | |
| | |
Gross profit | | | 38,556 | | | | 85,734 | |
| | | | | | | | |
Operating Expenses | | | | | | | | |
| | | | | | | | |
Officer’s Salaries (Gross) | | | 35,000 | | | | 74,583 | |
Other Employee Salaries (Gross) | | | 144,807 | | | | 203,411 | |
Taxes (Payroll: Employer’s Share) | | | 4,578 | | | | 9,272 | |
Employee Benefits (Insurance, Pension Plan, etc.) | | | 39 | | | | 7,940 | |
Advertising | | | | | | | 0 | |
Bad Debts | | | | | | | 0 | |
Depreciation & Amortization | | | 61,124 | | | | 125,168 | |
Entertainment | | | | | | | 0 | |
Insurance (Real Estate) | | | | | | | 0 | |
Insurance (Other) | | | 154,022 | | | | 188,871 | |
Interest (Mortgage, Loans, etc.) | | | | | | | 0 | |
Leases (other that Rent) | | | | | | | 0 | |
Outside Services & Contractors | | | 171,829 | | | | 366,264 | |
Professional Fees (Attorney, Accountant) | | | 18,261 | | | | 48,435 | |
Rent and leases | | | 3,149 | | | | 50,232 | |
Case Number 05-12801 (Jointly Administered) Period Ending September 2005 Income Statement Page 2
| | | | | | | | |
Repairs and maintenance | | | 1,474 | | | | 2,288 | |
Supplies | | | | | | | 0 | |
Taxes (Real Property) | | | | | | | 0 | |
Taxes (Other) | | | | | | | 3,596 | |
Telephone | | | 4,820 | | | | 10,762 | |
Travel | | | 19,527 | | | | 32,415 | |
Utilities | | | | | | | 0 | |
U.S. Trustee quarterly fee | | | 3,750 | | | | 3,750 | |
| | | | | | | | |
Other Operating Expenses | | | | | | | | |
| | | | | | | | |
Internet / Website | | | 5,830 | | | | 20,689 | |
Office expense | | | 8,448 | | | | 14,459 | |
Postage | | | 110 | | | | 178 | |
Printing | | | | | | | 6,739 | |
Public company expense | | | 4,925 | | | | 5,551 | |
Equipment | | | | | | | 9,886 | |
Courier | | | 590 | | | | 11,406 | |
Customer support | | | | | | | 1,440 | |
Penalties (1) | | | 3,677 | | | | 3,677 | |
| | | | | | | | |
| | |
Total Operating Expenses | | | 645,958 | | | | 1,201,010 | |
| | |
| | | | | | | | |
| | |
Profit/Loss from operations | | | (607,402 | ) | | | (1,115,276 | ) |
| | | | | | | | |
Interest income | | | | | | | 62 | |
| | | | | | | | |
| | |
Net Income (Loss) | | | (607,402 | ) | | | (1,115,214 | ) |
| | |
| | |
(1) | | Penalty — Hyatt office — late fees |
| | |
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 Corporation, et al. | | Case Number:05-12801 Jointly Administered |
Cash Reconciliation Report
| | |
Xybernaut Corporation | | Accrual Basis |
Calendar Month Ending | | September 30, 2005 |
| | | | | | | | |
| | Operating/ | | | | |
| | Payroll Acct | | | Totals | |
| | |
(A) Beginning Cash Balance (A) | | | | | | | 394,505 | |
(B) Net Income | | | | | | | (607,402 | ) |
(C) Non Cash Expenses | | | | | | | | |
Amortization | | | | | | | | |
Depreciation | | | | | | | 24,838 | |
| | | | | | | | |
(C) Total | | | | | | | 24,838 | |
| | | | | | | |
| | | | | | | | |
(D) Cash from Operations (B+C) | | | | | | | (582,564 | ) |
| | | | | | | | |
Other Sources (Uses of Cash) | | | | | | | | |
| | | | | | | | |
Decrease (Incr) — Accounts Receivable | | | (112,729 | ) | | | | |
Decrease (Incr) — Inventory | | | 242,444 | | | | | |
Decrease (Incr) — equipment — computers | | | — | | | | | |
Decrease (Incr) — DTDF (Intercompany) | | | (34,450 | ) | | | | |
Decrease (Incr) — Prepaid Other Current Assets | | | 137,602 | | | | | |
Decrease (Incr) — Other Assets (PATENTS) net | | | 13,311 | | | | | |
Decrease (Incr) — Other Assets (Trademarks) net | | | 2,262 | | | | | |
Decrease (Incr) — Other Assets | | | 41,187 | | | | | |
| | | | | | | | |
Increase (Decr) — Accounts Payable | | | 52,005 | | | | | |
Increase (Decr) — Accrued Expenses | | | 588 | | | | | |
Increase (Decr) — Purchase Accrual | | | (20,980 | ) | | | | |
Increase (Decr) — Accrued P./R Taxes Increase (Decr) — Accrued Prof Fees | | | 135,080 | | | | | |
Increase (Decr) — Accrued Rent Increase (Decr) — Accrued Salaries | | | 71,693 | | | | | |
Increase (Decr) — Accrued Sales Taxes | | | — | | | | | |
Increase (Decr) — Deferred Restructuring Cost | | | (39,855 | ) | | | | |
Increase (Decr) — Deferred product & warranty revenue | | | (63,755 | ) | | | | |
| | | | | | | | |
(E) Total Other Sources (uses) of Cash | | | | | | | 424,401 | |
| | | | | | | |
| | | | | | | | |
(F) Ending Cash Balance (F = A+D+E) | | | | | | | 236,341 | |
| | | | | | | | |
(G) Balance per Bank Statement | | | | | | | 304,304 | |
(H) Less Outstanding Checks | | | | | | | 69,446 | |
(I) Add Deposits in Transit | | | | | | | 1,483 | |
| | | | | | | | |
(J) Reconciled Bank Balance [J=(G-H)+I] | | | | | | | 236,341 | |
In re:Xybernaut Corporation, et al. Case Number:05-12801 Jointly Administered
CASH RECONCILIATION REPORT
Payroll and Tax Accounts
(Business Debtor, Accrual Basis)
Calendar Month ending ___September 2005
(All figures refer to post-petition transactions)
| | | | | | | | |
Amounts shown represent payroll activity for the month of | | Payroll | | | Tax | |
August that occurred in the combined Operating/Payroll acct. | | Account | | | Account | |
| | | | | | | | |
(A) Beginning Cash Balance (A) | | | | | | | | |
| | | | | | |
| | | | | | | | |
Cash Receipts: | | | | | | | | |
| | | | | | | | |
Transfers from Operating Account | | | 101,347 | | | | | |
| | | | | | |
Transfers from Payroll Account | | | | | | | | |
| | | | | | |
Other — _________________________ | | | | | | | | |
| | | | | | |
| | | | | | | | |
(B) Total Cash Receipts (B) | | | 101,347 | | | | | |
| | | | | | |
| | | | | | | | |
(C) Cash Available (C= A+B) | | | 101,347 | | | | | |
| | | | | | |
| | | | | | | | |
Cash Disbursements: | | | | | | | | |
| | | | | | | | |
Gross Payroll for this period $ 98,146 | | | | | | | | |
| | | | | | | | |
Employee Benefits paid | | | 3,406 | | | | | |
| | | | | | | |
Net Payroll Paid | | | 67,846 | | | | | |
| | | | | | | |
Transfers to Tax Account | | | | | | | | |
| | | | | | | |
| | | | | | | | |
Taxes deposited or paid during period | | | | | | | | |
Employee’s share of FICA Tax | | | 4,449 | | | | | |
| | | | | | |
Employer’s share of FICA Tax | | | 4,449 | | | | | |
| | | | | | |
Employee’s Federal Income Tax | | | 16,698 | | | | | |
| | | | | | |
Employee’s State Income Tax | | | 3,994 | | | | | |
| | | | | | |
Unemployment Tax | | | 505 | | | | | |
| | | | | | |
Unrecorded Bank Service Charges | | | | | | | | |
| | | | | | |
Other: ____________________________ | | | | | | | | |
| | | | | | |
| | | | | | | | |
(D) Total Disbursements (D) | | | 101,347 | | | | | |
| | | | | | |
| | | | | | | | |
(E) Ending Cash Balance (E=C-D) | | | | | | | | |
| | | | | | |
| | | | | | | | |
(F) Balance per Bank Statement (F) | | | | | | | | |
| | | | | | |
| | | | | | | | |
(G) Less Outstanding Checks (G) | | | | | | | | |
| | | | | | |
| | | | | | | | |
(H) Add Deposits in Transit | | | | | | | | |
| | | | | | |
| | | | | | | | |
(I) Reconciled Bank Balance {I = (F-G) +H] | | | | | | | | |
| | | | | | |
Ending Cash Balance (E) and Reconciled Bank Balance (I) should equal