Xybernaut's Outside Auditor Issues `Going Concern' Warning
Fairfax, Virginia, March 17 (Bloomberg) -- Xybernaut Corp.'s auditor warned there's ``substantial doubt' about the maker of wearable computer systems' ability to continue as a going concern, citing its continuing losses and need for more capital.
Shares of the Fairfax, Virginia-based company have gained more than 20-fold since September as the company announced a sale to Firestone Building Products Co. and said it was in talks with several ``world class' technology companies, including International Business Machines Corp., about joint projects.
The stock fell 1 1/2 to 20 1/2 in midafternoon trading of 977,000 shares. Its 36.7 million shares are valued at more than $730 million.
Grant Thornton LLP issued its caution about Xybernaut's future in a letter dated Feb. 25, filed by the company with the Securities and Exchange Commission in its annual report. Grant Thornton was hired after the company fired its prior auditor, PricewaterhouseCoopers LLP on Sept. 13. That accounting firm issued a ``going concern' warning to the company last year.
'The company feels comfortable' with the fundraising done since year's end,' said Xybernaut Controller Tom Davis in an interview.
Grant Thornton cited Xybernaut's ``recurring losses from operations' and said the company, which has accumulated losses of $48 million, will need more cash to fund its operations.
The annual report also revealed funding arrangements for the $13 million Xybernaut raised so far this year, including shares sold for well below market price.
It sold 647,500 unregistered shares in January for $2.46 million, for an average price of $3.80 a share. That's less than half the $11.20 average weighted price for the 60.1 million shares traded in January, according to Bloomberg analytics.
Xybernaut also borrowed $3 million in January at 10 percent interest. The unidentified lenders received an added inducement: warrants to buy 302,500 shares of stock at 10 cents a share.
In January and February, the company received $7 million as it issued 1,867,700 shares at an average price of $3.79 to investors exercising warrants received in prior financings.
An additional $618,970 was raised from employees and consultants exercising stock options for 231,842 shares, at an average price of $2.67.
As the company reported in a press release earlier this week, its 1999 loss widened to $16.8 million, or 78 cents a share from $13.1 million, or 80 cents. Average shares outstanding increased to 23.8 million from 17.7 million.
Revenue increased to $3.3 million from $875,560.
Xybernaut had a ``negligible' backlog of orders on Dec. 31. It holds 13 U.S. patents, with 12 patents pending.
Mar/17/2000 14:15
For more stories from Bloomberg News, click here.
(C) Copyright 2000 Bloomberg L.P. |
