Xybernaut

Xybernaut Corporation

Company type	Public
Industry	Wearable mobile computing technology
Predecessor	Computer Products & Services Incorporated (CPSI)
Founded	1990
Founder	Edward G. Newman
Defunct	2017
Fate	Dissolved amid financial controversies and regulatory investigations
Headquarters	Chantilly, Virginia , United States
Key people	Steven A. Newman (President from 1994), Perry L. Nolen (President and CEO from 2005)
Products	Atigo tablet PC, Poma wearable computer, MA-V wearable computer

Xybernaut Corporation specialized in the creation of wearable mobile computing technology, encompassing hardware, software, and related services. Its product lineup featured devices such as the Atigo tablet PC, the Poma wearable computer, and the MA-V wearable computer.

Originally based in Fairfax, Virginia, the firm moved its headquarters to Chantilly, Virginia in 2006.

The company's inaugural wearable device, the Poma, debuted in 2002 and initially attracted attention but subsequently faced criticism for its subpar functionality and design flaws, resulting in its inclusion on lists highlighting significant technological failures. Although Xybernaut survived bankruptcy proceedings, it ultimately dissolved in 2017 amid financial controversies and regulatory investigations.

Early history

Established in 1990 under the name Computer Products & Services Incorporated (CPSI) by Edward G. Newman, the enterprise rebranded as Xybernaut and went public in 1996. Steven A. Newman assumed the presidency in 1994. Despite repeated assurances of approaching profitability, the company endured 33 straight quarters of financial losses.

In 1998, former Virginia Governor George Allen became a member of Xybernaut’s board, serving until December 2000 following his election to the U.S. Senate. Allen was granted 110,000 stock options with a peak valuation of $1.5 million but never exercised them. Additionally, his law firm McGuire Woods LLP invoiced Xybernaut $315,925 for legal services rendered between 1998 and 1999.

In September 1999, Xybernaut terminated its relationship with accounting firm PricewaterhouseCoopers after receiving a "going concern" caution concerning the company’s fiscal health—highlighting persistent transparency challenges under the leadership of the Newman brothers.

Fraud charges and bankruptcy

In February 2005, Edward and Steven Newman were subpoenaed by the Securities and Exchange Commission regarding transactions involving Xybernaut stock. An internal investigation uncovered misconduct including charging personal expenses to corporate accounts, employing relatives without SEC disclosure, concealing significant transactions from the board, and interfering with audit processes. Both resigned in April 2005, with Perry L. Nolen—previously president of Xybernaut’s services division—appointed as President and CEO.

Xybernaut sought bankruptcy protection through reorganization in July 2005. While achieving some sales milestones with retail clients such as grocery retailer Tesco PLC and securing government contracts including those with the U.S. Army, growth was impeded by product drawbacks like cumbersome designs and battery-related issues. The company exited bankruptcy protection after restructuring in January 2007.

In October 2007, Edward and Steven Newman along with former General Counsel Martin Weisberg faced federal indictments for securities fraud and money laundering. The charges accused them of enabling Xybernaut to issue shares at artificially low prices to two Israeli businessmen who allegedly paid covert cash kickbacks. The businessmen involved—Zev Saltsman and Menachem Eiten—were also indicted and awaited extradition. Andrew Broawn, former President and CEO of Ramp, Inc., was implicated as well. Investors continued pursuing legal recourse as extradition processes advanced.

By July 2010, Zev Saltsman entered a guilty plea resolving related civil claims and forfeited $5 million—$4.5 million of which was allocated to former Xybernaut shareholders. This agreement concluded his case with both the SEC and U.S. Attorney's Office without necessitating deportation. Remaining funds were directed toward ongoing litigation against other parties involved.

On January 25, 2017, Edward G. Newman received a permanent injunction preventing future violations of federal securities antifraud statutes and was prohibited from holding officer or director positions in any publicly traded company.