As filed with the Securities and Exchange Commission on April 3, 2000
REGISTRATION NO. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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XYBERNAUT CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 54-1799851
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
12701 FAIR LAKES CIRCLE
FAIRFAX, VIRGINIA 22033
(703) 631-6925
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(Address, including zip code, and telephone number,
Including area code, of registrant's principal executive offices)
EDWARD G. NEWMAN
12701 FAIR LAKES CIRCLE
FAIRFAX, VIRGINIA 22033
(703) 631-6925
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(Name, address, including zip code, and telephone number,
Including area code, of agent for service)
Copy to:
Martin Eric Weisberg, Esq.
Parker Chapin Flattau & Klimpl, LLP
The Chrysler Building
405 Lexington Aveneue
New York, New York 10036
(212) 704-6000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
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If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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PROPOSED
TITLE OF EACH CLASS AMOUNT TO BE PROPOSED MAXIMUM MAXIMUM AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED(1) OFFERING PRICE AGGREGATE REGISTRATION
PER SHARE OFFERING PRICE FEE
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Common Stock, $.01 par value per share.. 1,000,000 (2) $17.157 (7) $17,157,000.00 $4,769.65
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Common Stock, $.01 par value per share.. 647,500(2) $17.157 (7) $11,109,157.50 $3,088.35
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Common Stock, $.01 par value per share.. 1,000,000(2)(3) $17.157 (7) $17,157,000.00 $4,769.65
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Common Stock, $.01 par value per share.. 1,996(2) $17.157 (7) $34,245.37 $9.52
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Common Stock, $.01 par value per share.. 4,805 (2) $17.157 (7) $82,439.39 $22.92
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Common Stock, $.01 par value per share.. 144,000 (2)(4) $17.157(7)(8) $2,470,608.00 $686.82
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Common Stock, $.01 par value per share.. 15,000(2)(5) $17.157 (8) $257,355.00 $71.54
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Common Stock, $.01 par value per share.. 30,000(2)(6) $18.000 (8) $540,000.00 $150.12
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Total Registration Fee.................. $13,568.57
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(1) Represents the shares of common stock being registered for resale by the
selling stockholders.
(2) Pursuant to Rule 416, the shares of common stock offered hereby also
include such presently indeterminate number of shares of common stock as
shall be issued by us to the selling stockholders upon adjustment under
anti-dilution provisions covering the additional issuance of shares by
Xybernaut resulting from stock splits, stock dividends or similar
transactions. We are not registering additional shares of common stock
which may result from price fluctuations and the operation of exercise
formulas of the warrants. This presentation is not intended to constitute a
prediction as to the future market price of the common stock or as to the
number of shares of common stock issuable upon exercise of the warrants.
See "Risk Factors -- Dilution"; and "Description of Securities."
(3) Represents the number of shares issued upon exercise of warrants to
purchase 1,000,000 shares of our common stock.
(4) Represents the number of shares of common stock issued as compensation for
marketing services rendered to us and includes 100,000 shares of common
stock issuable upon exercise of warrants.
(5) Represents the number of shares issuable upon exercise of warrants to
purchase 15,000 shares of our common stock.
(6) Represents the number of shares issuable upon exercise of warrants to
purchase 30,000 shares of our common stock.
(7) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (g) of the Securities Act of 1933, as amended
(the "Securities Act"); based on the average ($17.157) of the bid ($17.125)
and asked ($17.188) price on the Nasdaq SmallCap Market on March 29, 2000.
(8) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g) of the Securities Act, based on the higher of (a)
the exercise price of the warrants or (b) the offering price of securities
of the same class included in this registration statement.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
The information in this prospectus is not complete. We may not sell these
securities until the registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an offer to sell nor is
it seeking an offer to buy these securities in any state where the offer or sale
is not permitted.
SUBJECT TO COMPLETION, DATED APRIL __, 2000
PROSPECTUS
XYBERNAUT CORPORATION
2,843,301 SHARES OF COMMON STOCK
The stockholders of Xybernaut Corporation listed on page 10 of this
prospectus are offering for sale up to 2,843,301 shares of common stock of
Xybernaut under this prospectus.
The selling stockholders may offer their shares through public or private
transactions, at prevailing market prices, or at privately negotiated prices.
See "Plan of Distribution."
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NASDAQ SmallCap Market Symbol: "XYBR"
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On March 29, 2000, the closing price of one share of our common stock on
the NASDAQ SmallCap Market was $17.25.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY
CONSIDER THE FACTORS DESCRIBED UNDER THE CAPTION "RISK FACTORS" BEGINNING
ON PAGE 2 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this prospectus is _________________, 2000
RISK FACTORS
BEFORE YOU BUY SHARES OF OUR COMMON STOCK, YOU SHOULD BE AWARE THAT
THERE ARE VARIOUS RISKS ASSOCIATED WITH THAT PURCHASE, INCLUDING THOSE DESCRIBED
BELOW. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS, TOGETHER WITH ALL OF
THE OTHER INFORMATION IN THIS PROSPECTUS AND THE DOCUMENTS WE HAVE INCORPORATED
BY REFERENCE IN THE SECTION "WHERE YOU CAN FIND MORE INFORMATION ABOUT US,"
BEFORE YOU DECIDE TO PURCHASE SHARES OF OUR COMMON STOCK.
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RISKS ASSOCIATED WITH OUR HISTORY OF LOSSES AND FUTURE NEED FOR CAPITAL
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WE HAVE A HISTORY OF LOSSES AND, IF WE DO NOT ACHIEVE PROFITABILITY, WE MAY NOT
BE ABLE TO CONTINUE OUR BUSINESS IN THE FUTURE.
Our research, development, sales, marketing and general and
administrative expenses have resulted in significant losses and are expected to
continue to result in significant losses for the foreseeable future. We have
incurred the following losses since 1994:
Fiscal years ended:
o March 31, 1994 $47,352
o March 31, 1995 $1,303,892
o December 31, 1996 $5,238,536
o December 31, 1997 $9,479,966
o December 31, 1998 $13,111,488
o December 31, 1999 $16,775,797
THE "GOING CONCERN" QUALIFICATION ON THE REPORT OF OUR INDEPENDENT ACCOUNTANTS
MAY REDUCE OUR ABILITY TO RAISE ADDITIONAL FINANCING.
The report of our independent accountants on our December 31, 1999
consolidated financial statements contains an explanatory paragraph regarding
our ability to continue as a going concern. Our independent accountants cited
our history of operating losses and our need for additional capital as factors
which raised substantial doubt as to our ability to continue as a going concern.
This "going concern" qualification may reduce our ability to raise additional
financing.
WE COULD BE REQUIRED TO CUT BACK OR STOP OPERATIONS IF WE ARE UNABLE TO RAISE OR
OBTAIN NEEDED FINANCING.
The research, development, commercialization, manufacturing and
marketing of our products will likely require financial resources which are
significantly in excess of those presently available to us. If we are not able
to arrange financing or other third party arrangements on acceptable terms, we
may be unable to fully develop and commercialize any of our products and could
be required to cut back or stop operations.
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RISKS ASSOCIATED WITH THE INDUSTRY IN WHICH WE OPERATE
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OUR FUTURE REVENUES AND ABILITY TO PRODUCE NEW PRODUCTS DEPEND SUBSTANTIALLY ON
THE SUCCESS OF THE MOBILE ASSISTANT SERIES(R).
Our Mobile Assistant(R) Series currently consists of one product, the
MA IVTM. The Mobile Assistant Series is our principal product, and our success
will depend upon its commercial acceptance, which cannot be assured. Additional
product development will result in a significant increase in our research and
development expenses that may be unrecoverable should commercialization of new
products prove unsuccessful. We also could require additional funding if
research and development expenses are greater than we anticipate. As with most
high technology products, new models of the Mobile Assistant Series must be
introduced periodically for the Company to remain competitive. There can be no
assurance that these new models can be successfully developed or commercially
accepted.
WE MAY HAVE TO LOWER PRICES OR SPEND MORE MONEY TO EFFECTIVELY COMPETE AGAINST
COMPANIES WITH GREATER RESOURCES THAN US WHICH COULD RESULT IN LOWER REVENUES
AND/OR PROFITS.
The success of our products in the marketplace depends on many factors,
including product performance, price, ease of use, support of industry
standards, and customer support and service. Given these factors we cannot
assure you that we will be able to compete successfully. For example, if our
competitors offer lower prices, we could be forced to lower prices which would
result in reduced margins and a decrease in revenues. If we do not lower prices
we could lose sales and market share. In either case, if we are unable to
compete against our main competitors which include established companies like
Computing Devices International, a division of Ceridian Corporation, ViA Inc.,
Texas Microsystems, Telxon, Symbol, Norand, Teltronics, Inc. a subsidiary of
Interactive Solutions, Raytheon, and others, we would not be able to generate
sufficient revenues to grow the company or reverse our history of losses.
In addition, we may have to spend more money to effectively compete for
market share, including funds to expand our infrastructure, which is a capital
and time extensive process. Further, if other companies want to aggressively
compete against us, we may have to spend more money on advertising, promotion,
trade shows, product development, marketing and overhead expenses, hiring and
retaining personnel, and developing new technologies. These higher expenses
would hurt our net income and profits.
CURRENCY FLUCTUATIONS, ESPECIALLY IN THE JAPANESE YEN, MAY SIGNIFICANTLY
INCREASE OUR EXPENSES AND AFFECT OUR RESULTS OF OPERATIONS.
The exchange rates for some local currencies in countries where we
operate may fluctuate in relation to the U.S. dollar. Such fluctuations may have
an adverse effect on our expenses, revenues, earnings, assets or liabilities
when local currencies are translated into U.S. dollars. We are party to supplier
arrangements with several companies in Japan, including Shimadzu and Sony
Digital Products for the production of the MA IV system. The fees we pay to
these companies are paid in Japanese Yen. Any strengthening of the value of the
U.S. dollar against the Japanese Yen could
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result in an increase in our production expenses which, if substantial, could
have a material adverse effect on our financial condition and results of
operations.
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RISKS ASSOCIATED WITH
OUR INTERNAL OPERATIONS AND POLICIES
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SINCE WE DO NOT INTEND TO DECLARE DIVIDENDS IN THE FORESEEABLE FUTURE, THE
RETURN ON YOUR INVESTMENT WILL DEPEND UPON APPRECIATION OF THE MARKET PRICE OF
YOUR SHARES.
We have never paid any dividends on our common stock. Our board of
directors does not intend to declare any dividends in the foreseeable future,
but intends to retain all earnings, if any, for use in our business operations.
As a result, the return on your investment in Xybernaut will depend upon any
appreciation in the market price of the common stock. The holders of common
stock are entitled to receive dividends when, as and if declared by the board of
directors out of funds legally available for dividend payments. The payment of
dividends, if any, in the future is within the discretion of our board of
directors and will depend upon our earnings, capital requirements and financial
condition, and other relevant factors.
OUR COMPUTER SYSTEMS AND THOSE OF OUR CUSTOMERS AND SUPPLIERS MAY NOT RECOGNIZE
THE YEAR 2000 WHICH MAY AFFECT OUR COMPUTER SYSTEMS AND DISRUPT OUR BUSINESS.
The year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of our
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, a
temporary inability to process transactions, send invoices, or engage in similar
normal business activities.
We have utilized both internal and external resources to test,
reprogram or replace, as needed, our computing and communications hardware and
software for year 2000 modifications. Based on this evaluation, we have made
modifications to our computer system and determined that these systems will
properly utilize dates beyond December 31, 1999. As such, we are compliant with
the year 2000 issue.
As a result of the testing, we determined that our old phone system was
not year 2000 compliant. Our phone system was already scheduled for replacement
to add capacity, upgrade the telecommunications capabilities, and allow for
better customer service. In December 1999, we replaced the existing phone system
with one that provides enhanced capabilities and is year 2000 compliant. The
cost to purchase and install the new phone system was approximately $75,000. Our
estimate of the costs to remediate our year 2000 issue related to our telephone
system is based on presently available information. Outside of the phone system,
the cost of testing and modifying our computer systems to obtain year 2000
compliance was less than $10,000 in the aggregate.
We have contacted all of our significant suppliers and large customers
to determine the possible effect on our operations of their inability or failure
to remediate their own year 2000 Issue. However, we cannot guarantee that the
systems of other companies on which our systems rely will be timely converted,
or that a failure to convert by another company, or a conversion that is
incompatible with our systems, would not have material adverse effect on our
operations. We
-4-
believe that no exposure to contingencies related to the year 2000 issue for the
products we have sold.
We noted no significant product or system failures or miscalculations
related to the year 2000 issue on or around January 1, 2000.
Our estimates of the date of completion and cost of our year 2000
project are based on our best estimates, which we derived utilizing numerous
assumptions of future events including the continued availability of certain
resources, third party modification plans and other factors. The costs and
completion date of our year 2000 project could differ materially from our
estimates due to the lack of availability and cost of personnel trained in this
area, our ability to locate and correct all relevant computer codes, and similar
uncertainties.
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RISKS WHICH MAY DILUTE THE VALUE OF YOUR XYBERNAUT
SHARES OR LIMIT THE EFFECT OF THEIR VOTING POWER
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THE PRICE OF OUR COMMON STOCK IS HIGHLY VOLATILE.
The price of our common stock is highly volatile. During the period
from January 1, 1998 to March 29, 2000 the closing price of our common stock has
ranged from a high of $23.75 to a low of $1.00. Following periods of volatility
in the market price of a company's securities, securities class action
litigation has often been instituted against such a company. If similar
litigation were instituted against us, it could result in substantial costs and
a diversion of our management's attention and resources, which could have an
adverse effect on our business. The volatile fluctuations of the market price
are based on (1) the number of shares in the market at the time as well as the
number of shares we may be required to issue in the future, compared to the
market demand for our shares; (2) our performance and meeting expectations of
our performance, including the development and commercialization of our products
and proposed products; and (3) general economic and market conditions.
OUR EXECUTIVE OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS, TOGETHER, MAY
EXERCISE CONTROL OVER ALL MATTERS SUBMITTED TO A VOTE OF STOCKHOLDERS.
As of March 29, 2000, our executive officers, directors and principal
stockholders beneficially owned, in the aggregate, approximately 18% of our
outstanding shares of common stock. These stockholders, if acting together, may
be able to effectively control most matters requiring approval by our
stockholders. The voting power of these stockholders under certain circumstances
could have the effect of delaying or preventing a change in control of
Xybernaut.
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WE HAVE 5,239,755 SHARES OF OUR COMMON STOCK RESERVED FOR FUTURE ISSUANCES
WHICH CAN SUBSTANTIALLY DILUTE THE VALUE OF YOUR XYBERNAUT COMMON STOCK.
The issuance of reserved shares would dilute the equity interest of
existing stockholders and could have a significant adverse effect on the market
price of our common stock. As of March 29, 2000, we had 5,239,755 shares of
common stock reserved for possible future issuances upon conversion of
outstanding convertible securities, options and warrants. Certain convertible
securities, options and warrants are convertible into or exercisable for shares
of common stock at discounts from future market prices of the common stock.
Those discounts could result in substantial dilution to existing holders of
common stock. The sale of the common stock acquired at a discount could have a
negative impact on the trading price of the common stock and could increase the
volatility in the trading price of the common stock. See the section entitled
"Dilution" for a summary of the number of shares which could be issued upon
conversion of the outstanding preferred stock at various market prices.
In addition, we intend to seek additional financing which may result in
the issuance of additional shares of our capital stock and/or rights to acquire
additional shares of our capital stock. Those additional issuances of capital
would result in a reduction of your percentage interest in Xybernaut.
ANTI-TAKEOVER MEASURES IN OUR CERTIFICATE OF INCORPORATION COULD ADVERSELY
AFFECT THE VOTING POWER OF THE HOLDERS OF THE COMMON STOCK.
Our certificate of incorporation authorizes anti-takeover measures like
the authority to issue "blank check" preferred stock and the staggered terms of
the members of our board of directors. Those measures could have the effect of
delaying, deterring or preventing a change in control without any action by the
shareholders. In addition, issuance of preferred stock, without shareholder
approval, on those terms as the board of directors may determine, could
adversely affect the voting power of the holders of the common stock, including
the loss of voting control to others. See "Description of Securities."
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements which
involve substantial risks and uncertainties. These forward-looking statements
can generally be identified because the context of the statement includes words
such as "may," "will," "except," "anticipate," "intend," "estimate," "continue,"
"believe," or other similar words. Similarly, statements that describe our
future plans, objectives and goals are also forward-looking statements. Our
factual results, performance or achievements could differ materially from those
expressed or implied in these forward-looking statements as a result of certain
factors, including those listed in "Risk Factors" and elsewhere in this
Prospectus.
-6-
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C. New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
over the Internet at the SEC's Website at "http://www.sec.gov."
We have filed with the SEC a registration statement on Form S-3 to
register the shares being offered. This prospectus is part of that registration
statement and, as permitted by the SEC's rules, does not contain all the
information included in the registration statement. For further information with
respect to us and our common stock, you should refer to the registration
statement and to the exhibits and schedules filed as part of the registration
statement, as well as the documents discussed below.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update or supersede this information.
This prospectus may contain summaries of contracts or other documents.
Because they are summaries, they will not contain all of the information that
may be important to you. If you would like complete information about a contract
or other document, you should read the copy filed as an exhibit to the
registration statement or incorporated in the registration statement by
reference.
We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 (File No. 0-19041) until all of the shares
are sold:
o Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999; and
o The description of our common stock contained in the
registration statement on Form 8-A filed on July 15, 1996
under the Exchange Act (File No. 0-15086), including all
amendments or reports filed for the purpose of updating that
description.
You may request a copy of these filings, at no cost, by writing to us
at 12701 Fair Lakes Circle, Fairfax, Virginia 22033, (703) 631-6925, Attention:
John F. Moynahan or by e-mail at investorrel@xybernaut.com.
You can review and copy the registration statement, its exhibits and
schedules, as well as the documents listed below, at the public reference
facilities maintained by the SEC as described above. The registration statement,
including its exhibits and schedules, are also available on the SEC's web site.
-7-
USE OF PROCEEDS
The selling stockholders are selling all of the shares covered by this
prospectus for their own accounts. Accordingly, we will not receive any proceeds
from the resale of the shares.
We will receive proceeds from the exercise, if any, of the warrants. We
will use those proceeds, if any, for working capital and general corporate
purposes.
We will bear the expenses relating to this registration, other than
discounts and commissions, which will be paid by the selling stockholders.
DILUTION
As of March 29, 2000, we had issued and outstanding 37,105,681 shares
of common stock. At that date, there were an additional 5,239,755 shares of
common stock reserved for possible future issuances as follows:
o options to purchase 4,432,571 shares at an exercise price
between $1.37 and $13.81 per share. We have registered the
shares issuable upon exercise of the options under the
Securities Act;
o warrants to purchase 192,500 shares at a price between $2.00
and $18.00 per share. Of the 192,500 shares, we have
registered a total of 10,000 shares issuable upon exercise of
these warrants. This prospectus covers an additional 145,000
shares of common stock issuable upon exercise of the warrants,
which shares will be freely tradable without restriction
(subject to prospectus delivery requirements) on the effective
date of the registration statement. The balance of 37,500
shares will be deemed to be "restricted securities" when
issued;
o 98,495 shares issuable upon conversion of 250 shares of series
D preferred stock and 100 shares of series E preferred stock,
all of which will be deemed to be "restricted securities" when
issued; and
o 516,189 shares issuable upon exercise of options under the
1996 Omnibus Stock Incentive Plan, the 1997 Stock Incentive
Plan and the 1999 Stock Incentive Plan which have not been
granted as of March 29, 2000.
During the terms of the outstanding options and warrants, we must give
the holders the opportunity to profit from a rise in the market price of the
common stock. The existence of the options and warrants may adversely affect the
terms on which we may obtain additional equity financing. Moreover, the holders
are likely to exercise their rights to acquire common stock at a time when we
would otherwise be able to obtain capital with more favorable terms than we
could obtain through the exercise of such securities.
The shares which will be deemed "restricted securities" may be sold
under Rule 144. Rule 144 permits sales of "restricted securities" by any person,
whether or not an affiliate of the issuer, after one year. At that time, sales
can be made subject to the Rule's volume and other limitations and
-8-
after two years by non-affiliates without adhering to Rule 144's volume or other
limitations. In general, an "affiliate" is a person with the power to manage and
direct our policies. The SEC has stated that, generally, executive officers and
directors of an entity are deemed affiliates of the issuing entity.
Dilution Effects of the Conversion of Outstanding Preferred Stock
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The outstanding series D and series E preferred stocks are convertible
into common stock over time at the discretion of the holders. While the
conversion timing, terms, conditions and formulas vary for each issue, if the
holders of this preferred stock were able to fully convert their shares into
common stock on March 29, 2000 and elected to do so, approximately 98,495
additional shares of common stock would be issued. In addition, you should note
the following:
o The outstanding convertible series D and series E preferred
securities are convertible at a floating rate based on the
historical market price of the common stock. As a result, the
lower the stock price preceding the time the holder converts,
the more common shares the holder will receive upon
conversion.
o To the extent the selling stockholders convert and then sell
their common stock, the common stock price may decrease due to
the additional shares in the market. This could allow the
selling stockholders to convert their convertible preferred
stock into greater amounts of common stock, the sales of which
would further depress the stock price.
o The significant downward pressure on the price of the common
stock as the selling shareholders convert and sell common
stock could encourage short sales by the selling stockholders
or others. This could place further downward pressure on the
price of the common stock.
o The conversion of the convertible preferred stock may result
in substantial dilution to the interests of other holders of
common stock since each holder of convertible preferred may
ultimately convert and sell the full amount issuable upon
conversion. In this regard, even though each selling
stockholder may not convert its preferred stock into more than
4.99% of the then outstanding common stock, this restriction
does not prevent a selling stockholder from converting and
selling some of its holding and then converting the rest of
its holdings. In this way, an individual selling stockholder
could sell more than 4.99% of the outstanding common stock
while never holding more than 4.99% of the outstanding common
stock at a time.
SELLING STOCKHOLDERS
This prospectus covers the resale by the selling stockholders of up to
2,843,301 shares of our common stock.
The following table lists the selling stockholders and certain
information regarding the beneficial ownership be each of the selling
stockholders of shares of our common stock as of March
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29, 2000, and as adjusted to reflect the sale of the shares. Information
concerning the selling stockholders, their pledgees, donees and other non-sale
transferees who may become selling stockholders, may change from time to time.
To the extent the selling stockholders or any of their representatives advise us
of such changes, we will report those changes in a prospectus supplement to the
extent required. See "Plan of Distribution."
The registration of the following shares through this Registration
Statement allows the following persons and entitiies to sell their shareholdings
on the open market and is not necessarily an indication of intent to sell their
shares of common stock
Percentage
of Common
Shares of Common Stock -----------------------
Stock Beneficially Beneficially Shares of Common Shares of Common
Owned Prior to Owned Prior Stock to be Sold Stock Beneficially
Offering to the Owned
Offering after Offering
-----------------------
Number Percent
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Balmore Funds, S.A. (1) 500,000 1.3% 500,000 0
*
Austost Anstalt Schaan (2) 500,000 1.3% 500,000 0
Crystalite Investments Ltd. (3) 1,000,000 (6) 2.7% 1,000,000 0 *
Dalston Holdings Limited (4) 647,500 1.7% 647,500 0
*
McGuire Woods Battle and Booth LLP 1,996 (7) * 1,996 0
*
Parker Chapin LLP 4,805 (7) * 4,805 0
*
International Business Solutions, Inc. (5) 144,000 (8) * 144,000 (11) 0
*
E. Dell Smith 15,000 (9) * 15,000 (11) 0
*
Christina S. Kohlhaas 30,000 (10) * 30,000 (11) 0
*
*
Total 7 % 0
=== ===
* Less than 1%
(1) Francois Morax is the director and control person of Balmore
Funds S.A., a British Virgin Islands corporation.
(2) Thom Hackl is the representative and control person of Austost
Anstalt Schaan, a British Virgin Islands corporation.
(3) Mr. John Gainsford is the director and control person of
Crystalite Investments Ltd., a British Virgin Islands
corporation.
(4) Mr. C.B. Williams is the director and control person of
Dalston Holdings Limited, a Turks and Caicos company.
-10-
(5) Benjamin Cohen is the director and control person of
International Business Solutions, Inc.
(6) Represents the number of shares issued upon exercise of
warrants.
(7) Represents the number of shares of common stock issued as
partial compensation for legal services rendered to us for the
year ended December 31, 1999.
(8) Includes 100,000 shares of common stock issuable upon exercise
of warrants. These warrants are currently exercisable with
respect to 5,000 shares of common stock. See - "Description of
Securities".
(9) Represents the number of shares of common stock issuable upon
exercise of warrants. See - "Description of Securities".
(10) Represents the number of shares of common stock issuable upon
exercise of warrants. These warrants are currently exercisable
with respect to 20,000 shares of common stock. See -
"Description of Securities".
(11) Assumes that each selling stockholder will exercise all of its
warrants into common stock.
DESCRIPTION OF PRIVATE PLACEMENT TRANSACTIONS
The common stock have the material rights and obligations discussed
below and under the section entitled "Description of Securities." We have filed
the agreements relating to these rights and obligations with the SEC. We urge
you to read them in their entirety.
Balmore Funds, S.A. and Austost Anstalt Schaan acquired their shares of
common stock in a private placement transaction entered into on November 19,
1999. Under the terms of the purchase agreement dated as of November 19, 1999
among us and Balmore Funds, S.A. and Austost Anstalt Schaan, we agreed to sell
1,000,000 shares of our common stock at $3.00 per share for an aggregate
purchase price of $3,000,000. The average closing price of our common stock for
the month preceding November 19, 1999 was $3.24. In connection with our sale of
common stock to Balmore Funds, S.A. and Austost Anstalt Schaan, we agreed to
file a registration statement covering the resale of the common stock by
December 31, 1999 and cause the registration statement to be declared effective
by the SEC within 90 days after filing. If the registration statement is not
effective within 90 days after filing, we will have to pay to the holders
liquidated damages equal to 1% of the purchase price paid by Balmore Funds, S.A.
and Austost Anstalt Schaan for the shares of common stock purchased and
outstanding for the first 30 day period until the registration statement has
been declared effective and 2% of the purchase price paid by Balmore Funds, S.A.
and Austost Anstalt Schaan for the shares of common stock purchased and
outstanding for each subsequent 30 day period until the registration statement
has been declared effective. The company has obtained a waiver of such
liquidated damages from Balmore Funds, S.A. and Austost Anstalt Schaan.
Crystalite Investments Ltd. acquired its shares upon exercise of
warrants issued to it pursuant
-11-
to a loan financing agreement dated as of October 18, 1999, as amended and
restated, between us and Crystalite Investments Ltd. We received cash advances
from Crystalite Investments Ltd. totaling $1,000,000 between September 23, 1999
and December 31, 1999. These advances were issued in connection with the loan
financing agreement and a secured promissory note for the principal amount of
$1,000,000. Under the term of the loan financing agreement, we issued to
Crystalite Investments Ltd. warrants to purchase 1,000,000 shares of our common
stock. These warrants had a term of three years and an exercise price of $1.00
per share, which was the closing price of our common stock on September 21,
1999, the date the agreement between us and Crystalite Investments Ltd. was
reachded. Under the terms of the warrants, we agreed to register the shares of
common stock issuable upon exercise of the warrants. As of March 29, 2000, all
of these warrants have been exercised and converted into 1,000,000 shares of our
common stock.
Dalston Holdings Limited acquired its shares of common stock in a
private placement transaction entered into on January 3, 2000. Under the terms
of the common stock purchase agreement dated as of January 3, 2000 between us
and Dalston Holdings Fund Limited, we agreed to sell 647,500 shares of our
common stock at $4.00 per share for an aggregate purchase price of $2,590,000.
The average closing price of our common stock for the month preceding January 3,
2000 was $4.805. In connection with our sale of the common stock, we agreed to
register the common stock under the first registration statement we filed after
January 28, 2000.
Other than being investors in various private placements and other
financings for our common stock, Balmore Funds, S.A., Austost Anstalt Schaan,
Crystalite Investments Ltd. and Dalston Holdings Limited have not had any
material relationship with us during the past three years.
Each of McGuire Woods Battle and Booth LLP and Parker Chapin LLP are
counsel to our company. The shares of common stock were issued to McGuire Woods
Battle and Booth LLP and Parker Chapin LLP as partial compensation for legal
services rendered to us for the period ending December 31, 1999. George Allen,
Esq., a member of the firm McGuire Woods Battle and Booth LLP, is one of our
Directors. Martin Eric Weisberg, Esq., a member of the firm Parker Chapin LLP,
is our Secretary and one of our Directors.
International Business Solutions, Inc. provides marketing related
services to us and is one of our customers. In connection with the defined
marketing program to be implemented by International Business Solutions, Inc.
for the promotion of our products, we agreed on January 3, 2000 to issue 44,000
shares of common stock and warrants to purchase 100,000 shares of common stock
at $6.00 per share. The average closing prices of our common stock for the month
preceding January 3, 2000 was $4.805. The warrants are currently exercisable
with respect to 5,000 shares.
E. Dell Smith serves as a consultant to us on selected governmental and
business issues. In connection with such services, we agreed to issue E. Dell
Smith warrants to purchase 15,000 share of our common stock at $2.00 per share.
Warrants to purchase 10,000 shares of common stock were granted on October 25,
1999 and warrants to purchase 5,000 shares of common stock were granted on
January 3, 2000. The average closing prices of our common stock for the month
preceding October 25, 1999 was $1.805 and for the month preceding January 3,
2000 was $4.805.
Christina Kohlhaas has provided us with certain financial consulting
services. In connection with these services, on October 22, 1996 we issued
warrants to purchase 30,000 shares of our common stock at prices ranging from
$4.25 to $18.00 per share. The average closing prices of our common stock for
the month preceding October 22, 1996 was $4.41. The warrants are currently
exercisable with respect to 20,000 shares of common stock.
Other than as indicated above, the selling stockholders are not
affiliated with us.
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DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock consists of 80,000,000 shares of common
stock, par value $0.01 per share, and 6,000,000 shares of preferred stock, par
value $0.01 per share. As of March 29, 2000, we have 37,105,681 shares of common
stock, 250 shares of series D preferred stock and 100 shares of series E
preferred stock issued and outstanding. We have reserved 5,239,755 shares of
common stock for issuance upon conversion of the preferred stock and outstanding
options and warrants.
COMMON STOCK
Voting
The holders of our common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. Our
certificate of incorporation and by-laws do not provide for cumulative voting
rights in the election of directors. Accordingly, holders of a majority of the
shares of common stock entitled to vote in any election of directors may elect
all of the directors standing for election.
Dividends
Holders of common stock are entitled to receive ratably those dividends
as may be declared by our board of directors out of funds legally available for
that purpose.
Rights on Liquidation
In the event of our liquidation, dissolution or winding up, holders of
common stock are entitled to share ratably in the assets remaining after payment
of liabilities.
Pre-emptive or Redemption Rights
Holders of common stock have no preemptive, conversion or redemption
rights. All of the outstanding shares of common stock are fully-paid and
nonassessable.
PREFERRED STOCK
Our board of directors has the authority to issue up to 6,000,000
shares of preferred stock from time to time in one or more series. Our board has
the authority to establish the number of shares to be included in each series,
and to fix the designations, powers, preferences and rights of the shares of
each series and the applicable qualifications, limitations or restrictions. The
issuance of preferred stock may have the effect of delaying or preventing a
change in control. The issuance of preferred stock could decrease the amount of
earnings and assets available for distribution to the holders of common stock,
if any, or could adversely affect the rights and powers, including voting
rights, of the holders of the common stock. In certain circumstances, the
issuances could have the effect of decreasing the market price of the common
stock.
-13-
As of the date of this prospectus, we have not designated any shares of
preferred stock other than the series A, B, C, D and E preferred stock. The
series A, B and C preferred stock have been fully converted. As of March 29,
2000, there are 250 shares of series D preferred stock and 100 shares of series
E preferred stock issued and outstanding.
WARRANTS
Of the total 2,843,301 shares of common stock registered for sale by
the selling stockholders, 145,000 shares are issuable upon exercise of warrants.
The warrants were issued to the selling stockholders as compensation for certain
services provided to our company.
The warrants to purchase 100,000 shares of our common stock have a term
of twenty-four months and an exercise price of $6.00 per share. These warrants
are currently exercisable with respect to 5,000 shares of common stock and will
become exercisable for an additional 5,000 shares on May 1, 2000 and on the
first day of each of the eighteen consecutive months immediately thereafter.
The warrants to purchase 15,000 shares of our common stock have a term
of three years and an exercise price of $2.00 per share. These warrants are
currently fully exercisable.
The warrants to purchase 30,000 shares of our common stock have a term
of five years and are exercisable as follows: (i) $4.25 per share with respect
to 10,000 shares of common stock; (ii) $11.00 per share with respect to an
additional 10,000 shares of common stock on the day after the closing price of
the common stock equals or exceeds $11.00 per share for 25 consecutive trading
days or for 30 out of 35 consecutive trading days; and (iii) $18.00 per share
with respect to the remaining 10,000 shares on the day after the closing bid
price of the common stock equals or exceeds $18.00 per share for 20 consecutive
trading days. All of these warrants have adjustment provisions for standard
dilution events including stock splits, stock dividends and similar
transactions. These warrants are currently exercisable with respect to 20,000
shares.
ANTI-TAKEOVER CONSIDERATIONS.
Our certificate of incorporation authorizes the issuance of up to
6,000,000 shares of $0.01 par value preferred stock. The issuance of preferred
stock with such rights could have the effect of limiting stockholder
participation in certain transactions such as mergers or tender offers and could
discourage or prevent a change in our management. We have no present intention
to issue any additional preferred stock.
We have a classified or staggered board of directors which limits an
outsider's ability to effect a rapid change of control of our board. In
addition, at the 1998 Annual Meeting of Stockholders held on September 24, 1998,
our shareholders approved measures to amend our certificate of incorporation and
by-laws, where applicable, to:
o implement an advance notice procedure for the submission of
director nominations and other business to be considered at
annual meetings of stockholders;
-14-
o permit only the President, the Vice Chairman of our board, the
Secretary or our board of directors to call special meetings
of stockholders and to limit the business permitted to be
conducted at such meetings to be brought before the meetings
by or at the direction of our board;
o provide that a member of our board of directors may only be
removed for cause by an affirmative vote of holders of at
least 66 2/3% of the voting power of the then outstanding
shares entitled to vote generally in the election of directors
voting together as a single class;
o fix the size of our board of directors at a maximum of twelve
directors, with the authorized number of directors set at ten,
and our board of directors having the sole power and authority
to increase or decrease the number of directors acting by an
affirmative vote of at least a majority of the total number of
authorized directors most recently fixed by our board of
directors;
o provide that any vacancy on the board may be filled for the
unexpired term (or for a new term in the case of an increase
in the size of the board) only by an affirmative vote of at
least a majority of the remaining directors then in office
even if less than a quorum, or by the sole remaining director;
o eliminate stockholder action by written consent;
o require the approval of holders of 80% of the then outstanding
voting stock and/or the approval of 66 2/3% of the directors
for certain corporate transactions; and
o require an affirmative vote of 66 2/3% of the voting stock in
order to amend or repeal any adopted amendments to the
certificate of incorporation and bylaws adopted at the
meeting.
Those measures combined with the ability of our board of directors to
issue "blank check" preferred stock and the staggered terms of the members of
our board of directors, could have the effect of delaying, deterring or
preventing a change in control without any further action by the stockholders.
In addition, the issuance of preferred stock, without stockholder approval, on
such terms as our board may determine, could adversely affect the voting power
of the holders of the common stock, including the loss of voting control to
others.
TRANSFER AGENT AND REGISTRAR
Continental Stock Transfer & Trust Company is our Transfer Agent and
Registrar for our common stock and the redeemable warrants.
-15-
PLAN OF DISTRIBUTION
The selling stockholders and their pledgees, donees, transferees and
other subsequent owners, may offer their shares at various times in one or more
of the following transactions:
o on any U.S. securities exchange on which our common stock may
be listed at the time of sale
o in the over-the-counter market
o in privately negotiated transactions
o in connection with short sales; or
o in a combination of any of the above transactions.
The selling stockholders may offer their shares of common stock at
prevailing market prices at the time of sale, at prices related to those
prevailing market prices, at negotiated prices or at fixed prices.
The selling stockholders may also sell the shares under Rule 144
instead of under this prospectus, if Rule 144 is available for those sales.
The transactions in the shares covered by this prospectus may be
effected by one or more of the following methods:
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
o purchases by a broker or dealer as principal, and the resale
by that broker or dealer for its account under this
prospectus, including resale to another broker or dealer;
o block trades in which the broker or dealer will attempt to
sell the shares as agent but may position and resell a portion
of the block as principal in order to facilitate the
transaction; or
o negotiated transactions between selling stockholders and
purchasers without a broker or dealer.
The selling stockholders and any broker-dealers or other persons acting
on the behalf of parties that participate in the distribution of the shares may
be deemed to be underwriters. Any commissions or profits they receive on the
resale of the shares may be deemed to be underwriting discounts and commissions
under the Securities Act.
As of the date of this prospectus, we are not aware of any agreement,
arrangement or understanding between any broker or dealer and any of the selling
stockholders with respect to the offer or sale of the shares under this
prospectus.
We have advised the selling stockholders that during the time each is
engaged in distributing shares covered by this prospectus, each must comply with
the requirements of the Securities Act and Rule 10b-5 and Regulation M under the
Exchange Act. Under those rules and regulations, they:
o may not engage in any stabilization activity in connection
with our securities;
-16-
o must furnish each broker which offers common stock covered by
this prospectus with the number of copies of this prospectus
which are required by each broker; and
o may not bid for or purchase any of our securities or attempt
to induce any person to purchase any of our securities other
than as permitted under the Exchange Act.
In the purchase agreements and warrants we executed in connection with
the transactions with the selling stockholders we agreed to indemnify and hold
harmless each selling stockholder against liabilities under the Securities Act,
which may be based upon, among other things, any untrue statement or alleged
untrue statement of a material fact or any omission or alleged omission of a
material fact, unless made or omitted in reliance upon written information
provided to us by that selling stockholder. We have agreed to bear the expenses
incident to the registration of the shares, other than selling discounts and
commissions.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the Delaware General Corporation Law allows companies to
indemnify their directors and officers against expenses, judgments, fines and
amounts paid in settlement under the conditions and limitations described in the
law. Our certificate of incorporation authorizes us to indemnify our officers,
directors and other agent to the fullest extent permitted under Delaware law.
Our certificate of incorporation provides that a director is not
personally liable for monetary damages to us or our stockholders for breach of
his or her fiduciary duties as a director. A director will be held liable for a
breach of his or her duty of loyalty to us or our stockholders, his or her
intentional misconduct or willful violation of law, actions or in actions not in
good faith, an unlawful stock purchase or payment of a dividend under Delaware
law, or transactions from which the director derives an improper personal
benefit. This limitation of liability does not affect the availability of
equitable remedies against the director including injunctive relief or
rescission.
We have purchased a directors and officers liability and reimbursement
policy that covers liabilities of our directors and officers arising out of
claims based upon acts or omissions in their capacities as directors and
officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
LEGAL MATTERS
Parker Chapin LLP, New York, New York will pass upon the validity of
the securities offered hereby. Martin Eric Weisberg, Esq., a member of the firm,
is our Secretary and one of our Directors.
-17-
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-KSB for the year ended December 31,
1999, have been so incorporated in reliance on the report (which contains an
explanatory paragraph relating to our ability to continue as a going concern as
described in Note 1 to the consolidated financial statements) of Grant Thornton
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
RECENT DEVELOPMENTS
On March 30, 2000 the Company announced that it had executed a
definitive merger agreement with Selfware Inc., a leading provider of enterprise
management services and software for projects, maintenance and work flow.
Selfware is a privately-held company that was founded in 1983 and has over 30
full-time employees at its headquarters in Vienna, Virginia and an office in
Seattle, Washington. For the twelve months ended December 31, 1999, revenues for
Selfware were approximately $5.0 million, gross profit was approximately $2.0
million and net income was approximately $0.1 million. Under the terms of the
definitive agreement, the value of Selfware is determined by a formula with a
maximum valuation of approximately $8.1 million. The acquisition of Selfware by
Xybernaut will be effected by exchanging shares of Selfware for shares of
Xybernaut based on a ratio determined by the 30-day average closing price for
Xybernaut's common stock prior to closing. The approval of Selfware shareholders
for the acquisition is expected by April 7, 2000. The transaction is intended to
be accounted for as a pooling of interests. A fairness opinion for the
acquisition was provided to Xybernaut by a leading investment bank. Restated
financial statements to give effect to this proposed transaction have not been
presented herein because the transaction does not meet the significance tests
promulgated by Regulation S-X of the SEC.
-18-
========================================================= ==============================================
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON
OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR TO _________
REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. SHARES OF COMMON STOCK
YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION.
THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY SHARES IN ANY JURISDICTION
WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF
_________________, 2000.
XYBERNAUT CORPORATION
TABLE OF CONTENTS
Page
----
Risk Factors.........................................2
Where You Can Find More
Information About Us.........................7
Use of Proceeds......................................8
Dilution.............................................8
Selling Stockholders ................................9
Description of Securities...........................13
Plan of Distribution ...............................16
Indemnification for Securities
Act Liabilities.............................17
Legal Matters.......................................17
Experts ............................................18 ____________
PROSPECTUS
____________
_________________________, 2000
========================================================= ======================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses which will be paid
by us in connection with the issuance and distribution of the securities being
registered on this registration statement. The selling stockholders will not
incur any of the expenses set forth below. All amounts shown are estimates.
Filing fee for registration statement............... $13,568.57
Legal fees and expenses............................. $10,000.00
Accounting expenses................................. $5,000.00
---------
Total............................................... $28,568.57
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL") provides, in general, that a corporation incorporated under the
laws of the State of Delaware, such as the registrant, may indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding (other than a derivative action
by or in the right of the corporation) by reason of the fact that such person is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such person's
conduct was unlawful. In the case of a derivative action, a Delaware corporation
may indemnify any such person against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification will be made in
respect of any claim, issue or matter as to which such person will have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery of the State of Delaware or any other court in which such
action was brought determines such person is fairly and reasonably entitled to
indemnity for such expenses.
Our certificate of incorporation provides that directors will not be
personally liable for monetary damages to us or our stockholders for breach of
fiduciary duty as a director, except for liability resulting from a breach of
the director's duty of loyalty to us or our stockholders, intentional misconduct
or willful violation of law, actions or inactions not in good faith, an unlawful
stock purchase or payment of a dividend under Delaware law, or transactions from
which the director derives improper personal benefit. Such limitation of
liability does not affect the availability of equitable remedies such as
injunctive relief or rescission. Our certificate of incorporation also
-19-
authorizes us to indemnify our officers, directors and other agents, by bylaws,
agreements or otherwise, to the fullest extent permitted under Delaware law. We
have entered into an indemnification agreement with each of our directors and
officers which may, in some cases, be broader than the specific indemnification
provisions contained in our certificate of incorporation or as otherwise
permitted under Delaware law. Each indemnification agreement may require us,
among other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as a director or
officer, against liabilities arising from willful misconduct of a culpable
nature, and to obtain directors' and officers' liability insurance if available
on reasonable terms.
We maintain a directors and officers liability policy with Genesis
Insurance Company that contains a limit of liability of $3,000,000 per policy
year.
ITEM 16. EXHIBITS.
NUMBER DESCRIPTION OF EXHIBIT
4.1 Form of Warrant issued to Crystalite Investments, Ltd.
4.2 Form of Warrant issued to International Business Solutions,
Inc.
4.3 Form of Warrant issued to E. Dell Smith
4.4 Form of Warrant issued to Christina S. Kohlhaas.
4.5 Form of Warrant issued to E. Dell Smith
5 Opinion of Parker Chapin LLP.
10.1(1) Form of Purchase Agreement dated as of November 19, 1999.
10.2 Form of Restated Bridge Financing Agreement dated as of
October 18, 1999, restated as of December 30, 1999.
10.3 Form of Common Stock Purchase Agreement dated as of January 3,
2000.
10.4(1) Form of Registration Rights Agreement dated as of November 19,
1999.
10.5(1) Form of Escrow Agreement dated as of November 19, 1999.
23.1 Consent of Grant Thornton LLP
23.2 Consent of Parker Chapin LLP (included in their opinion filed
as Exhibit 5.1).
- -------------
(1) Incorporated by reference to the report on Form 10-KSB, file No.
000-21013
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
II-2
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment will be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of the issue.
The undersigned small business issuer hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement will be deemed
II-3
to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time will be deemed to be the initial bona fide offering thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fairfax, Commonwealth of Virginia on March 31, 2000.
XYBERNAUT CORPORATION
By:
Edward G. Newman
/s/ Edward G. Newman
--------------------------------
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement on Form S-3 has been signed below by the following
persons in the capacities indicated on March 31, 2000.
/s/ Edward G. Newman Chairman of the Board,
- -------------------------------------------- President and Chief Executive Officer
Edward G. Newman
/s/ Kaz Toyosato Executive Vice President -
- -------------------------------------------- Asian Operations and Director
Kaz Toyosato
/s/ John F. Moynahan Senior Vice President and
- -------------------------------------------- Chief Financial Officer
John F. Moynahan
/s/ Martin Eric Weisberg Director
- -------------------------------------------
Martin Eric Weisberg
/s/ Lt. Gen. Harry E. Soyster Director
- --------------------------------------------
Lt. Gen. Harry E. Soyster
/s/ James J. Ralabate Director
- --------------------------------------------
James J. Ralabate
II-5
/s/ Keith P. Hicks Director
- --------------------------------------------
Keith P. Hicks
/s/ Steven A. Newman Executive Vice President and Vice Chairman
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Steven A. Newman of the Board
/s/ Phillip E. Pearce Director
- --------------------------------------------
Phillip E. Pearce
/s/ Eugene J. Amobi Director
- --------------------------------------------
Eugene J. Amobi
/s/ Edwin Vogt Director
- --------------------------------------------
Edwin Vogt
SECURITIES AND
EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
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EXHIBITS TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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XYBERNAUT CORPORATION
(EXACT NAME OF ISSUER AS SPECIFIED
IN ITS CHARTER)
APRIL __, 2000
E-1
NUMBER DESCRIPTION OF EXHIBIT
4.1 Form of Warrant issued to Crystalite Investments, Ltd.
4.2 Form of Warrant issued to International Business Solutions, Inc.
4.3 Form of Warrant issued to E. Dell Smith
4.4 Form of Warrant issued to Christina S. Kohlhaas.
4.5 Form of Warrant issued to E. Dell Smith
5 Opinion of Parker Chapin LLP.
10.1(1) Form of Purchase Agreement dated as of November 19, 1999.
10.2 Form of Restated Bridge Financing Agreement dated as of October 18, 1999, restated as of December 30, 1999.
10.3 Form of Common Stock Purchase Agreement dated as of January 3, 2000.
10.4(1) Form of Registration Rights Agreement dated as of November 19, 1999.
10.5(1) Form of Escrow Agreement dated as of November 19, 1999.
23.1 Consent of Grant Thornton LLP.
23.2 Consent of Parker Chapin LLP (included in their opinion filed as Exhibit 5.1).
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(1) Incorporated by reference to the report on Form 10-KSB, file No. 000-21013
E-2