Xybernaut to Hold Auction for Its Waypoint Patent Group

CHANTILLY, Va., April 26 /PRNewswire-FirstCall/ -- Xybernaut Corporation (XYBRQ.PK), a high tech company currently in Chapter 11, has received court approval to sell its "Waypoint" group of patents at auction, with the objective of raising sufficient cash to come out of bankruptcy protection and successfully reorganize.

The "Waypoint" patent group sets forth technology and business processes to provide wireless direct mail by sending information to targeted mobile users at specific locations. Xybernaut believes the Waypoint patents can allow wireless companies to provide location-based services to mobile devices such as cellphones, PDAs and portable computer devices. Locations can be focused in feet or miles, depending on the desired audience.

These services can include precisely-targeted ads, maps, restaurant locations, traffic reports and other useful information, all automatically queued off of the location and stated preferences of the holder of the wireless device.

Advertisers want to know that they are delivering the desired message to an interested audience at the right time and place. The Company believes that the Waypoint patents enable this exacting business solution.

While advertising has long supported access to radio and television broadcasts and much of the internet, Google has recently announced the first use of this model for wireless services. Google will blanket San Francisco with WiFi coverage, offering free wireless internet access to those who would agree to accept beamed ads from local businesses on their wireless devices. Google and its partner in this effort, Earthlink, will build a multi-million dollar infrastructure of mini-transmitters, to allow delivery of information to users to within 100 to 200 feet of target areas.

But with Xybernaut's Waypoint technology there would be no need for building a costly new infrastructure in order to localize service. The Company believes that advertising-based media companies could combine the GPS built into mobile devices with Xybernaut's "location-based service" technology, to beam ads to selected groups of users anywhere, based on their preferences and mobile device settings. For example, they could beam a message to people in Times Square telling them that tickets were still available that night for a local theater performance, or that a local men's store had a 30%-off sale underway on suits and topcoats, with an additional discount for those responding to that beamed message.

"Xybernaut's business and patent portfolio reflects our long-term understanding of the importance of delivering the right information to the right person in the right place at the right time," said Perry L. Nolen, President and CEO. "Our patents cover a number of significant intellectual properties covering hardware, software and business methods. As a result, Xybernaut has a number of patents covering technologies that were ahead of their time when the patents were granted. But we believe their time has now come."

Nolen added: "Google has already proven the value of the advertising-based model on the Internet, and has extended that model to wireless services. Due to intense competition on cell phone rates and the world-wide resistance of consumers to pay additional fees, the future of revenues for wireless companies seems to be heading in the direction of ways in which wireless companies can generate advertising dollars. We believe that is exactly what Waypoint delivers."

Comments Dr. Nir Kossovsky, an investment banker and CEO of Technology Option Capital, LLC of Pittsburgh who is helping market Xybernaut's patent portfolio: "The Waypoint patents and business methods have become part of the mainstream package of wireless technology offerings known as 'location-based services.' While it has taken six years for this technology to gain recognition as the future for the wireless industry, Xybernaut has already secured patents that cover an advertising revenue model for location-based services."

Adds Robert Smith, an investment banker with SSG Capital Advisors L.P., who is working with Dr. Kossovsky on the sale of the patents: "The financial press has long predicted that ring tone sales and music downloads would not support the wireless service providers. Location-based services offer great content but a recent survey suggested customer resistance to special subscription fees. It thus is clear that targeted advertising, at no cost to the recipient, is the next big thing and we believe the Waypoint patents have it."

In addition to the Waypoint group of patents, Xybernaut owns three other major patent groups that cover wearable computers, flat-panel display use and transferable core computers, none of which are included in the Waypoint auction. Transferable core computers are small devices that contain a user's operating system, applications and data, allowing the user to carry their entire computing environment with them.

A substantial number of companies have expressed interest in the Waypoint patent, Nolen said, and the company intends to conduct an auction next month among interested buyers.

Parties interested in submitting a bid should contact Robert Smith of SSG at 212.754.4108 or rsmith@ssgca.com or Nir Kossovsky of Technology Option Capital at 412.661.7076 or nkossovsky@tocllc.com. The successful bid will be subject to approval by the bankruptcy court. There can be no assurance that the auction will be successfully completed or, if completed, as to the amount of money received by the Company.

Cautionary note: All statements, other than historical facts, included in the foregoing press release regarding the Company's financial position, business strategy, and plans of management for future operations are "forward looking statements." They are based on management's beliefs and assumptions, and on information currently available to management. Forward looking statements include, but are not limited to, statements in which words such as "expect," "see," "anticipate," "intend," "plan," "believe," "hope," "estimate," "consider," or similar expressions are used. Such forward looking statements are not guarantees of future performance.

The Company continues to face a severe liquidity crisis and possible insolvency and has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. Risk factors related to the Company's financial condition and the bankruptcy proceeding that could cause actual results to differ from these forward looking statements include, but are not limited to, the following: the Company's ability to continue as a going concern; the Company's ability to obtain court approval of the Company's motions; the Company's ability to maintain contracts that are critical to its operation; the ability of the Company to attract and retain key executives and qualified personnel; the Company's ability to execute its strategic initiatives, including expense reduction; the Company's ability to profit from its products and services; the Company's ability to reorganize and/or market its intellectual property and other assets; and the Company's ability to generate cash flow and obtain financing to support its operations and its reorganization and intellectual property and other asset marketing efforts.

These statements are based on current expectations and speak only as of the date of such statements. The Company undertakes no obligation to publicly revise or update these forward looking statements, whether as a result of new information, future events or otherwise.

Contact: Leo Murray, William Armstrong or Michael Glickman, 212-922-0900

William Beecher, 301-469-7655