Xybernaut Reports Increased Third Quarter Revenues; Shipments of New Wearable Computer Products Expected to Result in Record Fourth Quarter Revenues

Business Wire, Nov 12, 2001

Business Editors/Hi-Tech Writers

FAIRFAX, Va.--(BUSINESS WIRE)--Nov. 12, 2001

Xybernaut(R) Corporation (Nasdaq:XYBR) today announced that total revenues for the third quarter ending September 30, 2001 were approximately 15% greater than revenues for the same period last year, with product revenues increasing by more than 30%.

Revenues for the quarter ended September 30, 2001 where $2.3 million, compared with $2.0 million for the same period of the prior year. The net loss for the quarter was $8.1 million, or $0.15 per share, compared with $5.9 million, or $0.15 per share, for the same period in the prior year.

"The MA(R) V and the MA TC, our latest generations of wearable computer solutions, started shipping in volume late in the third quarter, which limited revenue growth in that quarter," said Edward G. Newman, President. "However, we were able to get initial shipments to our key customers for testing and acceptance in time for orders to be placed and scheduled for delivery in the fourth quarter."

"As a result, we project our fourth quarter revenues to be the highest in Xybernaut's history. It is significant to note that the increased revenues in the third quarter were achieved without shipments to Bell Canada on its previously-announced initial order. We expect these revenues to be realized in the fourth quarter of 2001," concluded Newman.

Revenues for the nine months ended September 30, 2001 were $6.6 million, compared with $7.1 million for the same period last year. The net loss for the same nine-month period was $22.5 million, or $0.46 per share, compared with $16.6 million, or $0.44 per share, for the prior year.

Adjusting for a one-time sale last year, overall revenues would have been higher for the nine months ended September 30, 2001, than for the same period in the prior year. This one-time order was a $925,000 sale of software and products.

In view of the new hardware product introductions, the results of the nine months ended September 30, 2001 and 2000 included charges of $1.1 million and $1.0 million, respectively, taken as a reserve against the possible obsolescence of the remaining MA IV inventories.

A conference call to discuss the results of the third quarter and recent developments, including our participation at Comdex, will be held on Tuesday, November 13th, 2001 at 8:30 am EST. There will be a question and answer session immediately following the presentation. To participate in the call dial 800/553-0349 approximately 10 minutes before the conference is scheduled to begin.

International callers should dial 612/288-0329. For anyone who is unable to participate in the conference call, access to a recording will be available November 13, 2001 at 1:45 pm until November 14, 2001 at 11:59 pm EST. The rebroadcast can be accessed by dialing (USA) 800/475-6701. International dialers can call 320/365-3844. The rebroadcast PIN number is 611446.

The call will also be available via audio streaming over the Internet during and after the call by accessing Xybernaut's web site at http://www.xybernaut.com.

About Xybernaut Corporation:

Xybernaut Corporation is the leading provider of wearable computing hardware, software and services, bringing communications and full-function computing power in a hands-free design to people when and where they need it. The Mobile Assistant(R) V (MA(R) V), Xybernaut(R)'s patented wearable PC, runs all major PC operating systems, including Windows(R) 98/2000/NT, Linux and SCO Unix.

With the MA V, customers can realize immediate savings in maintenance, repair, diagnosis, inspection, inventory control and data collection in a broad spectrum of industries, including manufacturing, distribution, utilities, government and transportation. Xybernaut also provides hyper linking, multimedia authoring tools, project management, asset management and speech software toolkits.

Headquartered in Fairfax, Virginia, Xybernaut has offices and subsidiaries in Europe (Germany) and Asia (Japan). For additional information, please visit Xybernaut's web site at http://www.xybernaut.com

MS-DOS, Windows and Windows NT are registered trademarks of Microsoft

Corporation

Summary of Results(a):

                       Three Months Ended       Nine Months Ended
                          September 30,            September 30,
                   -----------------------  -----------------------
                        2001        2000        2001        2000
                       ------      ------      ------      ------


Revenues            $ 2,316,413 $ 2,016,806 $ 6,613,198 $ 7,053,713

Net loss
 applicable
 to holders of
 common stock         8,073,236   5,941,963  22,463,820  16,589,818
Net loss per
 share applicable
 to holders of
 common stock       $      0.15 $      0.15 $      0.46 $      0.44
Weighted average
 shares outstanding  52,309,601  38,579,676  49,114,344  37,304,405


(a) On April 7, 2000, Xybernaut acquired Selfware, Inc, which
    subsequently changed its name to Xybernaut Solutions, Inc.
    ("Xybernaut Solutions"). The merger was accounted for as a pooling
    of interests. All financial data of the Company, including
    Xybernaut's previously issued financial statements for the periods
    presented herein, have been restated to include the historical
    financial information of Xybernaut Solutions.