Xybernaut(R) Reports 1998 Operating Results, Including Fourth Quarter Change in Revenue Recognition; Management Supports Wall Street Estimates of $40 Million Revenue in 1999
FAIRFAX, Va., April 15 /PRNewswire/ -- XYBERNAUT CORPORATION
(Nasdaq: XYBR), the leader in wearable computing, today reported financial
results for the fourth quarter and year ended December 31, 1998, including a
change in revenue recognition which had the effect of lowering reported fourth
quarter revenues "but the Company will recognize these sales in 1999,"
according to Edward Newman, Xybernaut's Chairman and Chief Executive Officer.
Mr. Newman said that he "supports Wall Street estimates that Xybernaut's 1999
sales will reach or exceed $40 million."
Mr. Newman noted that "Our new MA IV wearable computer has been well
received, with strong editorial and critical reviews and orders which in the
fourth quarter resulted in shipments of more than $1 million worth of
products, including all available remaining inventory of our prior 133P.
However, some of our fourth quarter sales were to major re-sellers with whom
Xybernaut has a strategic relationship, and following 'best industry
practices' we have elected not to recognize revenue on certain of these
transactions until the units are paid for by the re-seller or sold by the re-
seller to an end user, upon the advice of PriceWaterhouse Coopers, our
auditors and financial advisors. Only part of these shipments, therefore, are
now being recognized as revenue in 1998 with additional amounts to be
recognized in future quarters as these transactions conform to our newly
adopted revenue recognition policies."
Mr. Newman said that "This approach places us on the most conservative
method of revenue recognition. Concurrent with this, we have also fully
reserved all remaining stocks of parts and supplies and fully amortized all
tooling associated with our 133P earlier technology. We anticipate that
strong marketplace reaction to our product will continue to accelerate,
resulting in increased shipments of the MA IV, with a corresponding increase
in sales results throughout 1999."
Fourth quarter revenues rose 25.3% to $257,817 from $205,700 in the like
quarter the year before. A gross loss in the fourth quarter of ($842,369)
compared with a gross loss of ($436,715) in the last quarter of 1997. Margins
were adversely affected in the fourth quarter due to additional obsolescence
expense on parts and supplies and the full amortization of tooling relating to
the older technology equipment.
Net loss for the quarter amounted to ($5,838,708) or ($.29) per share on a
weighted average of 20,132,770 shares outstanding, against a fourth quarter
loss in 1997 of ($2,617,582) or ($.21) per share on 12,715,395 weighted shares
then outstanding.
Expenses for the quarter of $4,998,245 were $2,808,878 higher than the
fourth quarter of the prior year. Operating expenses in the fourth quarter
increased significantly over the prior year due to the addition of
infrastructure to support the market introduction of the MA IV, activities
associated with various filings to the SEC, and higher consulting expenses
directly associated to the marketing and distribution of the company's new
product.
For 1998 total revenues amounted to $875,560, up 7.8% from $812,522 the
prior year. Of this, product sales rose 57.3% to $873,586 from $555,222 the
year before, with the balance being consulting and license revenue which was
significantly less than in the prior year.
A gross loss of ($1,398,895) for 1998 compared with a gross loss of
($413,050) in the prior year. Operating expenses in 1998 amounted to
$11,746,203 against $9,149,461.
The net loss for 1998 amounted to ($13,111,488) equal to ($0.74) per
common share on 17,670,318 average weighted shares outstanding, compared with
($9,479,966) or ($0.74) per share of net loss in 1997 on 12,844,974 average
weighted shares then outstanding.
Said Mr. Newman: "While these decisions were painful from a financial
perspective, they provide management with a strong platform to support the
launch of our new MA IV in 1999. The past year was significant in terms of
transitioning the company from research and development to manufacturing,
marketing and sales, and we are confident after a review of the activities and
estimates of our various partners and the successes of our own internal
marketing and sales management, that we will reach or exceed the $40 million
revenue level estimated by outside Wall Street sources."
Xybernaut Corporation is a leader in providing hardware, software and
service solutions to the wearable computing industry. The Company's patented
wearable computer systems feature speech-activation, flat panel and head-
mounted displays that allow users hands-free access to information in the
computer's internal storage, in local area networks, and on the Internet on an
as-needed, where-needed basis. Xybernaut's software is designed to provide
users with the right information needed for the task at hand using consistent
navigation techniques and screen presentations. Xybernaut's customers include
leading corporations and government agencies for many mobile knowledge
delivery system applications, including maintenance and repair, inspection,
inventory control, manufacturing and data collection. Key industries include
manufacturing, distribution, transportation, government and insurance.
Headquartered in Fairfax, Virginia, Xybernaut also has offices in Europe
(Germany) and Asia (Japan).
Visit Xybernaut's Web Site at xybernaut.com
This press release contains forward-looking statements within the meaning
of The Private Securities Litigation Reform Act of 1995 (the "Act"). In
particular, when used in the preceding discussion, the words "plan",
"confident that", "believe", "expect", or "intend to" and similar conditional
expressions are intended to identify forward-looking statements within the
meaning of the Act and are subject to the safe harbor created by the Act.
Such statements are subject to certain risks and uncertainties and actual
results could differ materially from those expressed in any of the forward-
looking statements. Such risks and uncertainties include, but are not limited
to, market conditions, the availability of components for, and delays in the
start of, production of the next generations of the Mobile Assistant, general
acceptance of the Company's products and technologies, competitive factors,
the ability to successfully complete additional financings and other risks
described in the Company's SEC reports and filings.
XYBERNAUT CORPORATION
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
1998 1997 1998 1997
Product Sales
and Leases $257,682 $205,700 $873,586 $555,522
Consulting and Licenses 135 -- 1,974 257,000
Total Revenues 257,817 205,700 875,560 812,522
Cost of Goods Sold 1,100,186 642,415 2,274,455 1,225,572
Gross Profit (842,369) (436,715) (1,398,895) (413,050)
Operating Expenses 4,998,245 2,189,367 11,746,203 9,149,461
Operating Margin (5,840,614) (2,626,082) (13,145,098) (9,562,511)
Interest and Other, Net 1,906 8,500 33,610 82,545
Net Loss (5,838,708) (2,617,582) (13,111,488) (9,479,966)
Net Loss Per Share $(0.29) $(0.21) $(0.74) $(0.74)
Weighted Average
Number of
Shares Outstanding20,132,770 12,715,395 17,670,318 12,844,974
SOURCE Xybernaut Corporation
CO: Xybernaut Corporation
ST: Virginia, Germany, Japan
IN: CPR
SU: ERN
04/15/99 17:34 EDT prnewswire.com
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