As filed with the Securities and Exchange Commission on November 15, 2002
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
XYBERNAUT CORPORATION
(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.
Jenkens & Gilchrist Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
(212) 704-6000
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. |_| __________
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 MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE FEE(7)
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Common Stock, $.01 par value per share.. 17,183,332(2) $0.68(4) $11,684,665 $1,074.99
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Common Stock, $.01 par value per share..... 8,541,668(2)(3) $1.25(5) $10,677,085 $982.29
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Common Stock, $.01 par value per share..... 200,000(2)(3) $0.80(6) $160,000 $14.72
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Total Registration Fee.................. $2,072.00
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(1) Represents the shares of common stock being registered for resale by the
selling stockholders and the number of shares of common stock issuable upon
exercise of warrants to purchase shares of our common stock by the selling
stockholders.
(2) Pursuant to Rule 416 of the Securities Act of 1933, as amended (the
"Securities Act"), 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.
(3) Represents the number of shares of common stock issuable upon exercise of
warrants to purchase shares of our common stock.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (g) of the Securities Act; based on the average
($0.68) of the closing bid ($0.67) and asked ($0.68) price on the Nasdaq
Small Cap Market on November 14, 2002.
(5) 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.
(6) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g) of the Securities Act, based on 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.
(7) Calculated pursuant to Section 6(b) of the Securities Act based upon
Proposed Maximum Aggregate Offering Price multiplied by .000092.
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 and may be changed. These
securities may not be sold 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 ______________ __, 2002
PROSPECTUS
XYBERNAUT CORPORATION
25,925,000 SHARES OF COMMON STOCK
The selling stockholders of Xybernaut Corporation listed on page 10 of this
prospectus are offering for sale up to 25,925,000 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 Small Cap Market Symbol: "XYBR"
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On November 13, 2002, the closing price of one share of our common stock on
the NASDAQ Small Cap Market was $0.76.
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 ____________ __, 2002
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 sales, marketing, research, development 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 1997:
Fiscal years ended:
o December 31, 1997 $(10,051,757)
o December 31, 1998 $(13,001,338)
o December 31, 1999 $(16,697,413)
o December 31, 2000 $(24,185,222)
o December 31, 2001 $(32,199,579)
Fiscal quarters ended:
o March 31, 2002 $(8,015,640)
o June 30, 2002 $(6,656,151)
o September 30, 2002 $(7,873,415)
WE COULD BE REQUIRED TO CUT BACK OR STOP OPERATIONS IF WE ARE UNABLE TO REDUCE
CASH OPERATING EXPENSES AND OBTAIN NEEDED FINANCING.
We have recorded net losses since our inception. These losses are primarily
attributable to the operating expenses incurred by us to design, develop, sell
and market our wearable computer products and to provide general and
administrative support for these operating activities. During these periods, our
revenues and gross margins have not been sufficient to fund these operating
activities. As a result, we have consistently recorded negative cash flows from
operating activities and net losses and had an accumulated deficit of
$126,987,532 at September 30, 2002.
The combination of our operating losses and working capital requirements
have severely impacted our financial position and liquidity. At September 30,
2002, we had unrestricted cash on hand of $627,139 and accounts payable, accrued
expenses and short term notes totaling $5,732,326. Certain of these liabilities
are past their stated terms of payment, including those owed to vendors that
provide services and inventory that we require to execute our business plan. In
general, any company that does not pay its suppliers in a timely manner is at
risk of being forced into an involuntary bankruptcy proceeding instituted by
creditors, which may provide for the liquidation of assets or the reorganization
of assets and debts. We generally believe that we have a reasonably good
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relationship with most of our vendors and creditors. However certain of our
vendors have filed legal actions to recover overdue accounts payables and ceased
providing services and products to us. We do not believe that these actions will
have a material adverse effect on us however there can be no assurances that
other vendors will not pursue similar actions.
During 2002, 2001 and 2000, we funded our operating and investing
activities through our financing activities, which consist primarily of private
placements of common stock, warrant and stock option exercises and borrowings.
During 2002, we have taken steps that we believe are necessary to improve
our operations and raise additional capital, both of which are needed to enhance
our ability to meet our cash flow needs through December 31, 2002 and
thereafter.
During the period from March through November 2002, we have performed
ongoing reviews of operations and have developed a program to significantly
reduce our operating expenses. We began implementation of these cost cutting
programs in April 2002 and have continued to execute these reductions through
the date of this filing. Assuming there are no significant changes to our
business plan, we have targeted savings of approximately 50% from annualized
fourth quarter 2001 levels once these steps are fully implemented. Management's
target is to reach an operating expense level of approximately $5,000,000 per
quarter, beginning with the fourth quarter of 2002. Future significant
fluctuations may still occur as a result of non-recurring charges associated
with these cost-saving initiatives as well as our research and development
activities, which will vary depending on our wearable computer product
development cycles during any given period.
Subsequent to these changes, we believe that our staffing and resources
will be sufficient to carry out our business plan for the foreseeable future. In
addition to the cost cutting measures already undertaken, we continue to review
all aspects of our operations and may take additional actions to reduce
operating expenses further.
Even if the above cost cutting initiatives are fully implemented, we will
still be required to obtain outside financing to supplement our cash position.
During the period from January 1, 2002 through November 13, 2002, we raised
approximately $21,400,000 in cash through sales of our common stock to
institutional investors and through warrant and stock option exercises,
inclusive of the financings included in this registration statement. Potential
sources of additional financing include private equity offerings, strategic
investments, and various forms of debt financing. We believe that the
combination of cash on hand, cash flows from operations, and outside funding
will provide sufficient liquidity to meet our ongoing cash requirements. This is
based both on our historical ability to raise capital and on debt and equity
financings currently available to us. However, there can be no assurance that we
can or will obtain sufficient funds from operations or from additional
financings on terms acceptable to us. If we are unable to obtain sufficient
additional financing, we will be required to cut back or stop operations.
WE MAY FACE DIFFICULTIES IN OBTAINING NEEDED FINANCINGS.
The equity markets, especially for small capitalization technology stocks,
have remained depressed, and the U.S. and world economies have generally been in
a decline or recession. If a sustained decline in the general equity markets,
the price of our common stock, or the U.S. or world economy were to occur, we
could face difficulties in our ability to raise additional capital.
We have historically made several private placements of our common stock
per year,
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primarily to a limited number of institutional investors who specialize in
making similar types of investments. If these institutional investors were to
choose to not participate in future private placements, we could face
difficulties in our ability to raise additional capital.
On July 22, 2002, we received notice from Nasdaq that our common stock had
closed below $1 per share for 30 consecutive trading days. Effective October 29,
2002, we were granted a transfer to the Nasdaq Small Cap Market and given until
January 21, 2003 for the common stock price to close above $1 for ten
consecutive trading days. If we do not meet this stock price requirement, Nasdaq
can extend the date before which we must demonstrate compliance until July 21,
2003, so long as we are in compliance with various other Nasdaq listing
requirements. We currently are in compliance with all such requirements and
management anticipates we will remain in compliance in the future. However,
there can be no assurances that we will be able to remain in compliance in the
future. Prior to any potential delisting of our common stock, we can appeal any
Nasdaq decision to delist us for an extension to meet Nasdaq listing
requirements or possible other remedies. If necessary, management intends to
fully exercise all of its rights to maintain its listing.
As a result of the transfer to the Small Cap Market, we may face reductions
in holdings by institutional holders whose charters may not allow investment in
Nasdaq companies that do not trade on the National Market. Further, if we are
unable to remain on the Small Cap Market, we may be forced to trade on the Over
the Counter Bulletin Board or Pink Sheets markets, which could significantly
reduce the liquidity in the stock and interest of potential investors in
purchasing the stock.
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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(R) SERIES.
The Mobile Assistant series is our principal product, and our success will
depend to a large extent upon its commercial acceptance, which cannot be
assured. Additional product development will result in significant research and
development expenses that may be unrecoverable should commercialization of new
products prove unsuccessful. We also could require a higher level of funding if
research and development or sales and marketing expenses are greater than we
anticipate. As with most high technology products, new models of the Mobile
Assistant series must be introduced periodically for us to remain competitive.
There can be no assurance that these new models can be successfully developed or
marketed or will be commercially accepted.
WE HAVE SIGNIFICANT COMMITMENTS TO PURCHASE INVENTORY AND SERVICES IN THE
FUTURE.
We have commitments to purchase inventory, tooling and engineering and
other services from our suppliers and manufacturers related to our current and
future hardware product lines. We expect that we will enter into similar
inventory and engineering commitments in the future as we design, develop and
procure future wearable computer product lines.
The current contract with IBM requires us to purchase up to 24,000
computing units (the "MA V CPUs"). Changes in available technology and current
negotiations with IBM are such that we believe that the contract will be
modified and that this obligation will be significantly reduced
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and/or transferred to future generations of products or services. However, there
can be no assurance that we will be successful in renegotiating this commitment.
Under the current contract, the MA V CPUs are scheduled for purchase over a 15
month period following final acceptance by us, which acceptance is determined by
a number of criteria, including receipt of comprehensive product documentation
and other defined deliverables. We believe that all criteria for acceptance had
not been met at the time of this filing. Under the current contract, we may
cancel our purchase commitment following product acceptance by paying a
cancellation fee in an amount not to exceed approximately $4,000,000, which
amount decreases in proportion to the number of MA V CPUs purchased over the
contract period.
We have commitments to purchase computing units, flat panel and head
mounted displays, miscellaneous computing components as well as engineering and
other services from our various vendors, including IBM, related to the MA V, MA
TC, pomaTM, AtigoTM and future product lines. We believe that the timing and
amount of many of these shipments, services and payments may be adjusted through
the payment of cancellation fees, contract negotiations or the satisfaction of
obligations through the issuance of our equity securities. However, there can be
no assurance that we can successfully modify these contracts or commitments.
Excluding the potential impact of contract negotiations, we had
approximately $7,000,000 in inventory liabilities and commitments at September
30, 2002. We estimate that we will make additional payments of $1,000,000
between October 2002 and December 2002 in order to execute our business plan for
the remainder of 2002. If our current contracts with our suppliers were
completed in full, we would be obligated to make approximately $39,000,000 in
payments during 2003 or 2004 related primarily to the IBM MA V CPU contract. We
believe that these contracts will be modified such that this obligation will be
significantly reduced and/or transferred to future generations of products or
services. However, there can be no assurance that we will be successful in
modifying such obligations.
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, competing technologies 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 could result in reduced or negative 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,
Raytheon, Panasonic and others, we would not be able to generate sufficient
revenues to grow our 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 intensive process. Further, if other companies choose to aggressively
compete against us, we may have to reduce our prices and spend more money on
advertising, promotion, trade shows, product development, marketing and overhead
expenses, hiring and retaining personnel, and developing new technologies. These
lower prices and higher expenses would adversely affect our net income.
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CURRENCY FLUCTUATIONS, ESPECIALLY IN THE JAPANESE YEN AND EUROPEAN EURO, 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 competitive position as well as our expenses, revenues,
earnings, assets or liabilities when local currencies are translated into U.S.
dollars. We have significant operations in Asia, in particular Japan, and
Europe, in particular Germany. Also, we are party to supplier arrangements with
several companies in Asia and Europe for the production of the Mobile Assistant
series, the Atigo and the poma. Our foreign operations, including payments to
our suppliers, are typically funded in the local currencies. Any changes in the
value of the U.S. dollar against these currencies could result in an increase in
our reported expenses or inventory costs or a decrease in our reported revenues
which, if substantial, could have a material adverse effect on our financial
condition and results of operations.
IF OUR SALES AND RECEIVABLES CONTINUE TO BE CONCENTRATED AMONG A SMALL NUMBER OF
OUR CUSTOMERS, THE LOSS OF A CUSTOMER, A SUBSTANTIAL DECREASE OF SALES TO ONE OF
OUR CUSTOMERS OR A CUSTOMER'S INABILITY TO PAY AMOUNTS OWED TO US MAY HAVE A
MATERIAL ADVERSE EFFECT ON OUR SALES, OPERATING RESULTS AND CASH FLOWS.
A significant percentage of our sales has been concentrated among a
relatively small number of customers. For the fiscal quarter ended September 30,
2002, we had one (1) customer which comprised more than 10% of our total
revenues, representing 19% of total revenues. Additionally, at September 30,
2002, we had two (2) customers which each comprised more than 10% of our total
accounts receivable, representing an aggregate of 45% of total accounts
receivable. There can be no assurance that this concentration of sales and
receivables among customers will not continue in the future. The loss of a
significant customer or a substantial decrease in sales to such a customer would
have a material adverse effect on our sales and operating results. Our
arrangements with certain of our customers, especially those related to the sale
of our wearable computer hardware products, are based on the receipt of purchase
orders and otherwise are not subject to long-term written contracts and
generally may be terminated upon short notice. In addition, these and other
customers may demand price concessions from us that could adversely affect
profit margins. Also, our cash flows may be adversely affected if a customer is
unable or unwilling to repay amounts owed to us.
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RISK 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 us will depend upon any
appreciation in the market price of our 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.
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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, 2000 to November 13, 2002 the price of our common stock has ranged
from a high of $29.97 to a low of $0.19. 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; (3) market conditions for technology companies in the small
capitalization sector; and (4) 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 November 13, 2002, our executive officers, directors and principal
stockholders beneficially owned, in the aggregate, approximately 6% 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.
WE HAVE RECENTLY ISSUED A SIGNIFICANT AMOUNT OF OUR COMMON STOCK.
During the period from January 1, 2002 through November 13, 2002, we raised
$21,400,000 in cash through sales of our common stock to institutional investors
and through warrant and stock option exercises. As a result of our financings
and other activities, 53,410,141 shares of common stock were issued during this
period, which number includes 17,183,332 shares of common stock issued and
included on this prospectus. This represents a 90% increase in the number of
shares outstanding as compared to the number of shares outstanding as of
December 31, 2001.
WE HAVE 24,655,583 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 November 13, 2002 we had 24,655,583 shares of
common stock reserved for possible future issuances upon conversion of options
and warrants, which number includes 8,741,668 shares of common stock reserved in
connection with shares underlying warrants included on this prospectus. These
options and warrants are convertible into or exercisable for shares of common
stock at prices that may represent discounts from future market prices of the
common stock. The exercise of these options or warrants 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
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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 exercise of the outstanding
warrants and options at various market prices.
In addition, we may 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 such as
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 our
stockholders. In addition, issuance of preferred stock, without stockholder
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.
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.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (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.
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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-K, for the fiscal year ended December 31,
2001;
o Quarterly Report on Form 10-Q, for the quarterly period ended March
31, 2002;
o Quarterly Report on Form 10-Q, for the quarterly period ended June 30,
2002;
o Quarterly Report on Form 10-Q/A, for the quarterly period ended
September 30, 2002; 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, Suite 550, Fairfax, Virginia 22033, (703) 631-6925,
Attention: Thomas D. Davis or by e-mail at investorrelations@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.
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, if any, from the exercise of 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 November 13, 2002 we had issued and outstanding 112,938,254 shares of
common stock. At that date, there were an additional 24,655,583 shares of common
stock reserved for possible future issuances as follows:
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o options to purchase 7,872,955 shares at an exercise price between
$0.24 and $23.38 per share. We have registered the shares issuable
upon exercise of the options under the Securities Act;
o warrants to purchase 14,079,704 shares at a price between $1.11 and
$18.00 per share. Of the 14,079,704 shares, we have previously
registered a total of 4,850,536 shares issuable upon exercise of these
warrants. This prospectus covers an additional 8,741,668 shares of
common stock issuable upon exercise of warrants, which shares will be
freely tradable without restriction (subject to prospectus delivery
requirements) on the effective date of the registration statement. The
remaining 487,500 shares will be deemed to be "restricted securities"
when issued; and
o 2,702,924 shares issuable upon exercise of options under the Company's
stock incentive plans which have not been granted as of November 13,
2002. We have registered the shares issuable upon exercise of the
options.
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 a one year holding period. At
that time, sales can be made subject to the Rule's volume and other limitations
and 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.
SELLING STOCKHOLDERS
This prospectus covers the resale by the selling stockholders of up to
25,925,000 shares of our common stock.
The natural person holding voting and/or dispositive control over the
shares that Greta Holdings, Ltd. is Ms. C.B. Williams, Director. The address of
Greta Holdings, Ltd. is Gretton House, P.O. Box 65, Duke Street, Grand Turk,
Turks & Caicos Islands, British West Indies.
The natural person holding voting and/or dispositive control over the
shares that Reno Holdings, Ltd. is Ms. C.B. Williams, Director. The address of
Reno Holdings, Ltd. is Gretton House, P.O. Box 65, Duke Street, Grand Turk,
Turks & Caicos Islands, British West Indies.
The natural person holding voting and/or dispositive control over the
shares that State Street Corporation will sell is Touvia Strauss. The address of
State Street Corporation is c/o C.F.G., 28 Menachem begin Street, Ramat Gan,
Israel 52521.
The natural person holding voting and/or dispositive control over the
shares that Company Management Ltd. will sell is Touvia Strauss. The address of
Company Management Ltd. is c/o C.F.G., 28 Menachem begin Street, Ramat Gan,
Israel 52521.
The natural person holding voting and/or dispositive control over the
shares that Elite Financial Communications Group, LLC will sell is Dodi B.
Handy. The address of Elite Financial Communications Group, LLC is 605 Crescent
Executive Court, Suite 124, Lake Mary, Florida 32746.
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The address of James J. Ralabate is 5792 Main Street, Williamsville, New
York 14221.
The following table lists the selling stockholders and certain information
regarding the ownership by such selling stockholders of shares of our common
stock as of November 13, 2002, 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 selling stockholders to sell their share holdings in the
future on the open market and is not necessarily an indication of intent to sell
the shares.
Percentage Shares of Common
of Common Stock Owned
Shares of Common Stock Owned Shares of Common After Offering (1)(2)
Stock Owned Prior to Prior to Stock to be Sold ---------------------
Offering the Offering (1) Number Percent
- ----------------------------------------------------------------------------------------------------------------------------
Greta Holdings, Ltd. 0 0% 6,406,250 (3) 0 0%
Reno Holdings, Ltd. 0 0% 6,406,250 (3) 0 0%
State Street Corporation 0 0% 6,406,250 (3) 0 0%
Company Management Ltd. 0 0% 6,406,250 (3) 0 0%
Elite Financial Communications Group, LLC 0 0% 200,000 (4) 0 0%
James J. Ralabate 158,726 * 100,000 58,726 *
* Less than 1%
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(1) Assumes that the selling stockholders will exercise all of their warrants
into shares of common stock.
(2) Assumes all of the securities offered hereby will be sold by the selling
stockholders.
(3) Includes 2,135,417 shares of common stock issuable upon exercise of
warrants.
(4) Represents shares of common stock issuable upon exercise of warrants.
The common stock has 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.
Greta Holdings, Ltd. acquired its shares of common stock in a private
placement transaction entered into on November 6, 2002. Under the terms of the
common stock and warrant purchase agreement between Greta Holdings, Ltd. and us,
we agreed to sell 4,270,833 shares of our common stock at a price of $0.24 per
share, representing an approximate 14% discount to the closing price of our
common stock for the 10 trading days immediately prior to the date of the
agreement, for gross proceeds of $1,025,000. We also issued warrants to purchase
2,135,417 shares of our common stock at an exercise price of $1.25 per share.
These warrants are exercisable for a period of 3 years from the date of
issuance. We may call up to 100% of the these warrants if our common stock price
is
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equal to or greater than $2.50 per share for 5 consecutive trading days prior
to the date that we call the warrants. In connection with our sale of common
stock pursuant to the common stock and warrant purchase agreement, we entered
into a registration rights agreement pursuant to which, among other things, we
agreed to use our best efforts to file a registration statement to register for
resale the shares of common stock, including the shares of common stock issuable
upon exercise of the warrants, no later than 30 days after the closing date and
cause such registration statement to become effective as promptly as practicable
after filing but no later than 90 days after the closing date.
Reno Holdings, Ltd. acquired its shares of common stock in a private
placement transaction entered into on November 6, 2002. Under the terms of the
common stock and warrant purchase agreement between Reno Holdings, Ltd. and us,
we agreed to sell 4,270,833 shares of our common stock at a price of $0.24 per
share, representing an approximate 14% discount to the closing price of our
common stock for the 10 trading days immediately prior to the date of the
agreement, for gross proceeds of $1,025,000. We also issued warrants to purchase
2,135,417 shares of our common stock at an exercise price of $1.25 per share.
These warrants are exercisable for a period of 3 years from the date of
issuance. We may call up to 100% of the these warrants if our common stock price
is equal to or greater than $2.50 per share for 5 consecutive trading days prior
to the date that we call the warrants. In connection with our sale of common
stock pursuant to the common stock and warrant purchase agreement, we entered
into a registration rights agreement pursuant to which, among other things, we
agreed to use our best efforts to file a registration statement to register for
resale the shares of common stock, including the shares of common stock issuable
upon exercise of the warrants, no later than 30 days after the closing date and
cause such registration statement to become effective as promptly as practicable
after filing but no later than 90 days after the closing date.
State Street Corporation acquired its shares of common stock in a private
placement transaction entered into on November 6, 2002. Under the terms of the
common stock and warrant purchase agreement between State Street Corporation and
us, we agreed to sell 4,270,833 shares of our common stock at a price of $0.24
per share, representing an approximate 14% discount to the closing price of our
common stock for the 10 trading days immediately prior to the date of the
agreement, for gross proceeds of $1,025,000. We also issued warrants to purchase
2,135,417 shares of our common stock at an exercise price of $1.25 per share.
These warrants are exercisable for a period of 3 years from the date of
issuance. We may call up to 100% of the these warrants if our common stock price
is equal to or greater than $2.50 per share for 5 consecutive trading days prior
to the date that we call the warrants. In connection with our sale of common
stock pursuant to the common stock and warrant purchase agreement, we entered
into a registration rights agreement pursuant to which, among other things, we
agreed to use our best efforts to file a registration statement to register for
resale the shares of common stock, including the shares of common stock issuable
upon exercise of the warrants, no later than 30 days after the closing date and
cause such registration statement to become effective as promptly as practicable
after filing but no later than 90 days after the closing date.
Company Management Ltd. acquired its shares of common stock in a private
placement transaction entered into on November 6, 2002. Under the terms of the
common stock and warrant purchase agreement between Company Management Ltd. and
us, we agreed to sell 4,270,833 shares of our common stock at a price of $0.24
per share, representing an approximate 14% discount to the closing price of our
common stock for the 10 trading days immediately prior to the date of the
agreement, for gross proceeds of $1,025,000. We also issued warrants to purchase
2,135,417 shares of our common stock at an exercise price of $1.25 per share.
These warrants are exercisable for a
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period of 3 years from the date of issuance. We may call up to 100% of the these
warrants if our common stock price is equal to or greater than $2.50 per share
for 5 consecutive trading days prior to the date that we call the warrants. In
connection with our sale of common stock pursuant to the common stock and
warrant purchase agreement, we entered into a registration rights agreement
pursuant to which, among other things, we agreed to use our best efforts to file
a registration statement to register for resale the shares of common stock,
including the shares of common stock issuable upon exercise of the warrants, no
later than 30 days after the closing date and cause such registration statement
to become effective as promptly as practicable after filing but no later than 90
days after the closing date.
We entered into a service agreement dated as of September 10, 2002, or the
commencement date, with Elite Financial Communications Group, LLC for providing
investor relations services to us. Under the terms of the service agreement we
issued warrants to purchase up to 200,000 shares of our common stock exercisable
as follows: 25,000 shares exercisable at $0.50 per share; 25,000 shares
exercisable at $0.60 per share; 50,000 shares exercisable at $0.70 per share;
50,000 shares exercisable at $0.80 per share; and 50,000 shares exercisable at
$1.00 per share. The warrants shall vest in installments over a period of one
year from the commencement date and are exercisable through the earlier of the
term of the service agreement or September 10, 2003. Any warrants not vested at
the termination of the service agreement shall automatically be cancelled and
shall be null and void. In connection with the service agreement, we agreed to
register the shares of common stock underlying the warrants on this registration
statement.
James J. Ralabate, one of our directors, entered into a letter agreement,
dated August 7, 2002, with us whereby we agreed to issue Mr. Ralabate 100,000
shares of common stock as compensation for his consulting and legal services
rendered to us in connection with our intellectual property matters. In
connection with the letter agreement, we agreed to register these shares on this
registration statement.
All of the warrants have adjustment provisions for dilution events
including stock splits, stock dividends and similar transactions.
Other than as indicated above and as investors in private placements and
other financings for our common stock, the selling stockholders are not
affiliated with us and have not had any material relationship with us during the
past three years.
DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock consists of 200,000,000 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 November 13, 2002, we have 112,938,254 shares of
common stock issued and outstanding. We have reserved 24,655,583 shares of
common stock for issuance upon exercise of 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
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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.
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, all of
which have been fully converted into common stock.
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 stockholders 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;
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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.
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;
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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 the 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 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 they are
engaged in distributing shares covered by this prospectus, they 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;
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.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the Delaware General Corporation Law allows a company to
indemnify its 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 agents to the fullest extent permitted under Delaware law.
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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 inactions 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
insurance 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 SEC such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
Jenkens & Gilchrist Parker Chapin LLP, New York, New York, a stockholder of
our company, will pass upon the validity of the securities offered hereby.
Martin Eric Weisberg, Esq., a member of the firm, is our Secretary, one of our
Directors, and a stockholder in our company.
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EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 2001, have been
so incorporated in reliance on the report of Grant Thornton LLP, independent
certified public accountants, given on the authority of said firm as experts in
auditing and accounting.
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=========================================================== ======================================================
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR ANY
OTHER PERSON TO GIVE ANY INFORMATION OR TO REPRESENT
ANYTHING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF
GIVEN OR MADE, YOU SHOULD NOT RELY UPON SUCH
INFORMATION OR REPRESENTATIONS AS HAVING BEEN 25,925,000
AUTHORIZED BY XYBERNAUT CORPORATION. THIS PROSPECTUS SHARES OF COMMON STOCK
DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR
A SOLICITATION OF AN OFFER TO BUY, THOSE TO WHICH IT
RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS NOT
LAWFUL TO MAKE SUCH OFFER IN SUCH STATE. THE DELIVERY
OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME AFTER THE XYBERNAUT CORPORATION
DATE OF THIS PROSPECTUS.
TABLE OF CONTENTS
Page
Risk Factors.........................................2
Information Regarding Forward-Looking
Statements ..................................8
Where You Can Find More
Information About Us.........................8 ____________
Use of Proceeds......................................9
Dilution.............................................9 PROSPECTUS
Selling Stockholders ...............................10 ____________
Description of Securities...........................13
Plan of Distribution ...............................15
Indemnification for Securities
Act Liabilities.............................16 _________________________, 2002
Legal Matters.......................................17
Experts ............................................18
=========================================================== ======================================================
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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......................$ 2,072.00
Legal fees and expenses $ 10,000.00
Accounting expenses........................................$ 5,000.00
Total......................................................$ 17,072.00
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
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 directors and officers liability policies that contain a
combined limit of liability of $15,000,000 per policy year.
ITEM 16. EXHIBITS.
NUMBER DESCRIPTION OF EXHIBIT
4.1 Form of Warrant issued to Greta Holdings, Ltd.
4.2 Form of Common Stock and Warrant Purchase Agreement, dated as of
November 6, 2002, between Greta Holdings, Ltd. and Xybernaut
Corporation.
4.3 Form of Registration Rights Agreement, dated as of November 13, 2002,
between Greta Holdings, Ltd. and Xybernaut Corporation.
4.4 Form of Warrant issued to Reno Holdings, Ltd.
4.5 Form of Common Stock and Warrant Purchase Agreement, dated as of
November 6, 2002, between Reno Holdings, Ltd. and Xybernaut
Corporation.
4.6 Form of Registration Rights Agreement, dated as of November 13, 2002,
between Reno Holdings, Ltd. and Xybernaut Corporation.
4.7 Form of Warrant issued to State Street Corporation.
4.8 Form of Common Stock and Warrant Purchase Agreement, dated as of
November 6, 2002, between State Street Corporation and Xybernaut
Corporation.
4.9 Form of Registration Rights Agreement, dated as of November 13, 2002,
between State Street Corporation and Xybernaut Corporation.
4.10 Form of Warrant issued to Company Management Ltd.
4.11 Form of Common Stock and Warrant Purchase Agreement, dated as of
November 6, 2002, between Company Management Ltd. and Xybernaut
Corporation.
4.12 Form of Registration Rights Agreement, dated as of November 13, 2002,
between Company Management Ltd. and Xybernaut Corporation.
4.13 Form of Service Agreement dated as of September 10, 2002 by and
between Elite Financial Communications Group, LLC and Xybernaut
Corporation.
4.14 Form of Letter Agreement dated August 7, 2002 by and between James J.
Ralabate and Xybernaut Corporation.
5.1 Opinion of Jenkens & Gilchrist Parker Chapin LLP.
23.1 Consent of Grant Thornton LLP.
23.2 Consent of Jenkens & Gilchrist Parker Chapin LLP (included in their
opinion filed as Exhibit 5.1).
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) 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
registrant pursuant to the foregoing provisions, or otherwise, the registrant
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 registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant 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
registrant 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 registrant 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 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.
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 November 15,
2002.
XYBERNAUT CORPORATION
By: /s/ Edward G. Newman
----------------------------------------
Edward G. Newman
President, Chief Executive Officer and
Chairman of the Board of Directors
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes Edward G. Newman and Steven A. Newman, each acting
alone, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Form S-3 and to
file the same with exhibits thereto, and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or is substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
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 November 15, 2002.
SIGNATURE TITLE
/s/ Edward G. Newman President, Chief Executive Officer and
- ------------------------------ Chairman of the Board of Directors
Edward G. Newman
/s/ Steven A. Newman, M.D. Executive Vice President and Vice Chairman
- ------------------------------ of the Board of Directors
Steven A. Newman, M.D.
/s/ Thomas D. Davis Senior Vice President and Chief Financial
- ------------------------------ Officer
Thomas D. Davis
- ------------------------------ Executive Vice President and Director
Kazuyuki Toyosato
/s/ Dr. Edwin Vogt Senior Vice President and Director
- ------------------------------
Dr. Edwin Vogt
/s/ Eugene J. Amobi Vice President and Director
- ------------------------------
Eugene J. Amobi
/s/ Martin Eric Weisberg, Esq. Secretary and Director
- ------------------------------
Martin Eric Weisberg, Esq.
- ------------------------------ Director
James S. Gilmore III, Esq.
/s/ Phillip E. Pearce Director
- ------------------------------
Phillip E. Pearce
/s/ James J. Ralabate Director
- ------------------------------
James J. Ralabate
- ------------------------------ Director
Lt. Gen. Harry E. Soyster
SECURITIES AND
EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
_____________
EXHIBITS TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________
XYBERNAUT CORPORATION
(EXACT NAME OF ISSUER AS SPECIFIED
IN ITS CHARTER)
NOVEMBER 15, 2002
NUMBER DESCRIPTION OF EXHIBIT
4.1 Form of Warrant issued to Greta Holdings, Ltd.
4.2 Form of Common Stock and Warrant Purchase Agreement, dated as of
November 6, 2002, between Greta Holdings, Ltd. and Xybernaut
Corporation.
4.3 Form of Registration Rights Agreement, dated as of November 13, 2002,
between Greta Holdings, Ltd. and Xybernaut Corporation.
4.4 Form of Warrant issued to Reno Holdings, Ltd.
4.5 Form of Common Stock and Warrant Purchase Agreement, dated as of
November 6, 2002, between Reno Holdings, Ltd. and Xybernaut
Corporation.
4.6 Form of Registration Rights Agreement, dated as of November 13, 2002,
between Reno Holdings, Ltd. and Xybernaut Corporation.
4.7 Form of Warrant issued to State Street Corporation.
4.8 Form of Common Stock and Warrant Purchase Agreement, dated as of
November 6, 2002, between State Street Corporation and Xybernaut
Corporation.
4.9 Form of Registration Rights Agreement, dated as of November 13, 2002,
between State Street Corporation and Xybernaut Corporation.
4.10 Form of Warrant issued to Company Management Ltd.
4.11 Form of Common Stock and Warrant Purchase Agreement, dated as of
November 6, 2002, between Company Management Ltd. and Xybernaut
Corporation.
4.12 Form of Registration Rights Agreement, dated as of November 13, 2002,
between Company Management Ltd. and Xybernaut Corporation.
4.13 Form of Service Agreement dated as of September 10, 2002 by and
between Elite Financial Communications Group, LLC and Xybernaut
Corporation.
4.14 Form of Letter Agreement dated August 7, 2002 by and between James J.
Ralabate and Xybernaut Corporation.
5.1 Opinion of Jenkens & Gilchrist Parker Chapin LLP.
23.1 Consent of Grant Thornton LLP.
23.2 Consent of Jenkens & Gilchrist Parker Chapin LLP (included in their
opinion filed as Exhibit 5.1).