EX-99.2 3 exhibit2.htm EX-99.2 EX-99.2

EXHIBIT 99.2

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION

                 
 
     )          
 
     )          
 
     )          
In re:
     )          
XYBERNAUT SOLUTIONS, INC.,
     )     Case No. 05-12802 RGM
Debtor.
     )     Chapter 11

MONTHLY OPERATING REPORT Calendar Month September 1, 2006 to September 30, 2006

FINANCIAL BACKGROUND INFORMATION

1. ACCOUNTING BASIS: Cash      Accrual   X  

2. PREPARER: State the names address, telephone number and position of the person(s) who actually compiled the information contained in this report.

Ed Maddox, President XSI, 5175 Parkstone Drive, Chantilly, VA 20151
George Anderson, Controller XSI, 5175 Parkstone Drive, Chantilly, VA 20151

3. NUMBER OF EMPLOYEES paid during this period: 13

4. Have there been any CHANGES IN THE NATURE OF YOUR BUSINESS since the last reporting period? Yes      No X . If yes, explain below:

     

5. Are all BUSINESS LICENSES current? Yes X No      Not Applicable      

6. PRE-PETITION ACCOUNTS RECEIVABLE:

Beginning Balance $ 20,805.55

         
Collected this Period
   $ 0.00  
 
        
Ending Balance
     $20,805.55  
 
        

7. POST -PETITION ACCOUNTS RECEIVABLE:

0-30 Days: $ 357,699.52 31-60 Days: $ 48,600 Over 60 Days: $ 0.00

If there are any post-petition Accounts Receivable over 60 days provide Schedule AR giving a listing of such accounts and explain the delinquencies.

         
CUSTOMER
  AMOUNT   COMMENT
 
       

  8.   POST –PETITION ACCOUNTS PAYABLE:

0-30 Days: $ 120,680.51 31-60 Days: $ 13,692.64 Over 60 Days: $ 21,657.72

If there are any post-petition Accounts Payable over 30 days, provide Schedule AP giving a listing of such accounts and explain the delinquencies.

             
PAYEE
  AMOUNT   COMMENT
 
           
 
            
8618 Westwood Center Drive
  $ 21,657.72     August & September rent payments for a lease that was rejected.
 
           
 
            
Hayworth – Independent
Contractor
 
$6,290.14 		 
Contract terms – payable upon receipt of client
 
           
 
            
Planisware — Vendor
  $ 7,402.50     Accrued Expense — Pending reciept of purchase order
 
           

  9.   TAXES. Are all taxes being paid to the proper taxing authorities when due? Yes   X   No       . On the attached IRS Form 6123 report all tax deposits made with any financial institution for federal employment taxes. Be sure the form is complete and signed by an authorized employee of the receiving institution or taxing authority. Attach to this report a completed Form 6123 for each deposit made during the reporting period. Also attach copies of the monthly sales tax report, payroll tax report and unemployment tax report with evidence of payment of both federal and state taxes.

Other than payroll and sales taxes, all taxes are paid by Xybernaut Corporation, Xybernaut Solutions, Inc’s parent company. Xybernaut Corporation’s monthly operating report addresses the company’s current tax status.

  10.   ESCROW ACCOUNTS. Are you utilizing your tax account only for deposit and payment of payroll and sales taxes? Yes   X   No      If no, explain:      

11. Are all BOOKS AND RECORDS of the debtor(s) being maintained monthly and are all current? Yes   X   No      Explain:

12. INSURANCE EXPIRATION STATEMENT. Policy expiration dates are:

                 
Type
   Binder / Policy #
   Policy Dates
 
                
Auto & Truck
   73256759   03/31/06 01/31/07
 
                
Liability
   35392595   03/31/06 01/31/07
 
                
Workers Comp.
   71714215   03/31/06 01/31/07
 
                
Excess/Umbrella Liability
   79781303   03/31/06 01/31/07
 
                
Errors & Omissions
   35392595   03/31/06 01/31/07
 
                
Crime Policy
   81586177   03/31/06 01/31/07
 
                
International Coverage
   353925595   03/31/06 01/31/07
 
                

13. ACTIONS OF DEBTOR. During the last month, did the debtor:

(A) Fail to defend or not oppose any action seeking to dispossess the debtor from contro1 or custody of any asset of the estate? Yes      No   X   Explain:      

(B) Maintain such stock inventory, raw materials, insurance, employees and other resources as are necessary to preserve and maintain the going concern value of the assets of the debtor? Yes   X   No      Explain:      

14. TRANSFER OR SALE OF PROPERTY. Did the debtor or any person with control over any of the debtor’s assets transfer, convey or abandon any of the debtor’s assets to another party during the period of this report other than as set forth herein (including sales by creditors)?

Yes.     No   X   Explain:

15. PAYMENT TO SECURED CREDITORS during reporting period: (Attach additional sheets if necessary)

                 
Creditor
  Frequency of
Payments per 		  Amount
of Each 		  Next
Payment 		  Post-Petition
Pmts. No Made
 
                
None
 
 
 
 

16. PAYMENTS TO PROFESSIONALS (Attorneys, Accountants, Real Estate Agents, Auctioneers, Appraisers, etc., during reporting period: (Attach additional sheets, if necessary):

         
Professional
  Service   Amount
 
        
NONE
 
 

17. QUARTERLY U.S. TRUSTEE FEES paid during reporting period: $   0.00    

18. VERIFICATION: I declare under penalty of perjury that the information contained in this monthly operating report (including attached schedules) is true and correct to the best of my knowledge, information and belief.

                 
Dated: October 26, 2006
   DEBTOR-IN-POSSESSION
 
        
Name/Title:
   /s/Edward P. Maddox, President   Xybernaut Solutions, Inc.
 
                
Address:
   5175 Parkstone Drive   5175 Parkstone Drive
 
                
 
   Chantilly, VA 20151   Chantilly, VA 20151
 
                
      Phone: 703-480-0480

1

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION

                 
 
     )          
 
     )          
 
     )          
In re:
     )          
XYBERNAUT SOLUTIONS, INC.,
     )     Case No. 05-12802 RGM
Debtor.
     )     Chapter 11

Cash Disbursements Summary Report

Calendar Month Ending September 30, 2006

         
Total Disbursements from Operating Account
   (See Note 1) $154,907.28
Total Disbursements from Payroll Account
   (See Note 2) $131,355.59
Total Disbursements from Tax Escrow Account (See Note 3) — N/ A -
Total Disbursements from any other Account
   (See Note 4) - N/ A -
Grand Total Disbursements from all Accounts
   $ 286,262.87  

Note 1 — Include in this amount all checks written, wire transfers made from, or any other withdrawal from the general operating account. Exclude only transfers to the debtor-in-possession payroll account, the debtor-in-possession account tax escrow account or other debtor in possession account where the disbursements will be listed on this report.

Note 2 — Include in this amount all checks written, wire transfers made from, or any other withdrawal from the payroll account. Exclude only transfers to the debtor-in-possession operating account, the debtor- in-possession tax escrow account or other debtor-in-possession account where the disbursements will be listed on this report.

Note 3 — Include in this amount all checks written, wire transfers made from, or any other withdrawal from the tax escrow account. Exclude only, transfers to the debtor-in-possession operating account, the debtor-in-possession payroll account or other debtor-in-possession account where the disbursements will be listed on this report.

Note 4 — Include in this amount any other disbursements made by the debtor including (but not limited to) cash paid from a petty cash fund or cash register, amounts paid from any other debtor-in-possession account, and amounts paid from the accounts of others on the debtors behalf (for example disbursements made from a law firm’s escrow account as a result of a sale of property.)

ATTACH A COPY OF THE MOST RECENT MONTHLY BANK STATEMENT FOR EACH DEBTOR- IN-POSSESSION ACCOUNT.

2

In re: Xybernaut Solutions, Inc. Case Number: 05-12802

BALANCE SHEET
As of September 30, 2006

                 
Current Assets Cash
   12,605.04        
Pre-Petition Accounts Receivable
   20,805.55        
Post-Petition Accounts Receivable
   406,299.52        
Receivables from Officers
   0.00        
Employees, Affiliates
   0.00        
Note Receivables
   0.00        
Inventory
   0.00        
Other Current Assets:
                
Due to / From Xybernaut
   1,428,623.06        
Unbilled Accounts Receivable
   171,994.26        
Prepaid Other
   7,941.12        
Accounts Receivable Other XSI
   0.00        
Prepaid Insurance
   0.00        
Total Current Assets
           2,048,268.55
Fixed Assets Land
   0.00        
Buildings
   0.00        
Equipment, Furniture & Fixtures
   230,769.84        
Less Accumulated Depreciation
   (175,950.17 )        
Total Fixed Assets
           54,819.67
Other Assets Retainage
   33,188.00        
Deposits
   6,750.10        
Total Other Assets
           39,938.10
Total Assets
           2,143,026.32
Post-Petition Liabilities Accounts Payable
   156,030.87        
Salaries Payable
   61,697.25        
Accounts Payable -Other
   5,850.01        
Commissions Payable
   5,716.57        
Accrued Vacation
   27,876.23        
Accrued Rent & Storage
   0.00        
Taxes Payable
   0.00        
Accrued Interest
   0.00        
Deferred Revenue
   180,289.80        
Total Post-Petition Liabilities
           437,460.73
Pre-Petition Liabilities Priority Claims
   21,888.15        
Secured Debts
   0.00        
Unsecured Debtor
   19,319.49        
Total Pre-Petition Liabilities
           41,207.64
Owners Equity (Deficit)
                
Case Number 05-12802   Period Ending September 30, 2006 Balance Sheet Page 2
Capital Stock or Owner Investment
   15,849.68        
Paid In Capital Surplus
   605,059.88        
Retained Earnings (Deficit) Pre-Petition
   732,590.92        
Post-Petition
   310,857.47        
Total Owners Equity
           1,664,357.95
Total Liabilities and Owner’s Equity
           2,143,026.32

3

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
ALEXANDRIA DIVISION

                 
 
     )          
 
     )          
In re:
     )          
XYBERNAUT SOLUTIONS, INC.,
     )     Case No. 05-12802 RGM
Debtor.
     )     Chapter 11

MONTHLY OPERATING REPORT
INCOME STATEMENT
(Business Debtor, Accrual Basis)
Calendar Month September 1 to September 30, 2006
(All figures refer to post-petition transactions)

                 
 
   This Month
   Year to Date
(A) Total Sales/Income
     (A)          
Cost of Sales
     211,014.46       2,454,074.98  
Beginning Inventory
     0.00       0.00  
Purchases of Inventory
     0.00       110.24  
Less Ending Inventory
     0.00       0.00  
Direct Labor (Gross Salaries)
     59,657.63       621,218.09  
Purchased Services
     72,208.62       880,289.92  
(B) Total Cost of Sales (B)
     131,866.25       1,501,618.25  
(C) Gross Profit (C= A-B)
     79,148.21       952,456.73  
Operating Expenses Officers Salaries (Gross) Other Employee Salaries (Gross)
     15,416.68       138,750.12  
Taxes (Payroll: Employer’s Share)
     20,661.28       184,384.60  
Employee Benefits (Insurance, Pension, Plan, etc.
     7,320.15       95,495.99  
Employer’s Share)
     20,288.55       171,787.25  
Advertising
     0.00       0.00  
Bad Debts
     0.00       0.00  
Depreciation and Amortization
     1,545.03       16,659.61  
Entertainment
     0.00       0.00  
Insurance (Real Estate)
     0.00       0.00  
Insurance (Other)
     188.24       1,694.16  
Interest (Mortgage, Loans, etc.)
     0.00       0.00  
Leases (other than Rent)
     0.00       0.00  
Outside Services & Contractors
     1,692.67       25,175.78  
Professional Fees (Attorney, Accountant)
     0.00       0.00  
Rent and leases
     9,485.26       90,064.99  
Repairs and Maintenance
     367.77       1,133.29  
Supplies
     (699.54 )     12,246.50  
Taxes (Real Property)
     3,130.34       4,677.78  
Taxes (Other)
     0.00       0.00  
Telephone
     4,156.61       38,861.60  
Travel
     2,700.89       16,696.30  
Utilities
     0.00       0.00  
U.S. Trustees Quarterly Fee
     0.00       13,750.00  

Case Number 05-12802 Period Ending September 30, 2006 Income Statement Page 2

                 
 
   This Month
   Year to Date
Other Operating Expenses Overnight Delivery Dues and Subscriptions
     581.03       4,084.51  
Bank Fees / Other Fees
     0.00       79.99  
_______________________________
     201.36       4,145.47  
_______________________________
     —       —  
(D) Total Operating Expenses (D)
     87,036.32       819,687.94  
(E) Profit/Loss from operations (E= C-D) Other Income (Expenses)
     (7,888.11 )     132,768.79  
Interest Income
     —       —  
Interest Expense
     —       —  
________________________
     (______________0.00 )     (__________171.36 )
________________________
     —       —  
________________________
     —       —  
________________________
     —       —  
Extraordinary Items – In (Out)
     —       —  
Office Move Expenses
     —       —  
_________________________
     0.00       (7,388.75 )
_________________________
     —       —  
_________________________
     —       —  
 
     —       —  
(F) Total Other Income/Expense & Extraordinary Items (F)
     (0.00 )     (7,560.11 )
(G) Income Before Taxes (G= E+F)
     (7,888.11 )     125,208.68  
(H) Income Tax Expense (H)
     —       —  
(I) Net Income (Loss) (I= G-H)
     (7,888.11 )     125,208.68  

      .

    Accrual basis reporters must attach Cash Reconciliation Reports or a standard Statement of Sources and Uses of Case to this Report.

In re: Xybernaut Solutions, Inc. Case Number: 05-12802

CASH RECONCILIATION REPORT
(Business Debtor, Accrual Basis)
Calendar Month Ending September 30, 2006
(All figures refer to post-petition transactions)

                 
 
   Operating Account
   Totals
(A) Beginning Cash Balance (A)
           32,658.01
(B) Net Income, (line (I), Form 9-BA) (B) Add Expenses Not Requiring Cash:
                
Depreciation
   1,545.03   (7,888.11 )
(C) Sub-Total (C)
           1,545.03
(D) Cash from Operations (D = B + C) Other Sources (Uses) of Cash:
                
Sources (Uses)
                
 
                
Decrease (Incr.) – Accounts Receivable Decrease (Incr.) – Due to / From Xybernaut, Inc. Decrease (Incr.) – Prepaid & Other Current Assets
   100,612.27        
Decrease (Incr.) – Inventory
   (103,564.83 )        
Decrease (Incr.) – Equipment Computers
   6,037.00        
Increase (Decr) – Accum Depr.- Computers
   —        
Decrease (Incr.) – Equipment Demo Units
   —        
Increase (Decr) – Accum Depreciation-Demo Units
   —        
Decrease (Incr.) – Furniture & Fixtures
   —        
Increase (Decr) – Accum Depreciation-Furn &
   —        
Fixtures
   —        
Decrease (Incr.) – Leasehold Improvements
   —        
Increase (Decr) – Accum
   —        
Depreciation–Leasehold Imp
   —        
Decrease (Incr.) – Payroll Account
   85.00        
Increase (Decr) – Accounts Payable
   10,909.81        
Increase (Decr) – Accrued Other
   —        
Increase (Decr) – Accrued P/R Taxes
   —        
Increase (Decr) – Accrued Salaries
   (122.24 )        
Increase (Decr) – Accrued Rent
   —        
Increase (Decr) – Bonus Payable
   —        
Increase (Decr) – Accrued Commissions
   (1,675.63 )        
Increase (Decr) – Accrued Vacation
   (1,036.49 )        
Increase (Decr) – State Taxes Payable
   —        
Increase (Decr) – Notes Payable – Banks
   —        
Increase (Decr) – Deferred Revenue
   (25,369.78 )   (6,343.08 )
(Less) Unrecorded bank service charges
                
(E) Total other Sources (Uses) of Cash (E)
           (14,124.89 )
(F) Ending Cash Balance (F= A+D+E)
           12,190.04
(G) Balance per Bank Statement (G)
           40,489.65
(H) Less Outstanding Checks (H)
   28,299.61        
(I) Add Deposits in Transit (I)
   —        
(J) Reconciled Bank Balance {J=(G-H) +I}
           12,190.04

Ending Cash Balance (F) and Reconciled Bank Balance (J) should equal.

In re: Xybernaut Solutions, Inc. Case Number: 05-12802

CASH RECONCILIATION REPORT
Payroll and Tax Accounts

(Business Debtor, Accrual Basis)
Calendar Month Ending September 30, 2006
(All figures refer to post-petition transactions)

                 
 
   Payroll
   Tax
 
   Account*
   Account*
(A) Beginning Cash Balance (A) Cash Receipts:
           —
Transfers from Operating Account
           —
Transfers from Payroll Account
   500.00   —
Other — _Xybernaut Corporation______
   131,270.59   —
 
                
(B) Total Cash Receipts (B)
   131,270.59   —
(C) Cash Available (C= A+B) Cash Disbursements:
                
Gross Payroll for this period $126,265.11 Employee Benefits paid
   131,770.59        
Net Payroll Paid
   5,878.73        
Transfers to Tax Account
   89,135.39        
Taxes deposited or paid during period
   —   —
Employee’s share of FICA Tax
   7,559.50   —
Employer’s share of FICA Tax
   7,559.51   —
Employee’s Federal Income Tax
   14,837.02   —
Employee’s State Income Tax
   5,755.27   —
Unemployment Tax
   18.11   —
Bank Service Charges
   17.31   —
Other: Advantage/ADP Payroll Service Fees
   594.75   —
(D) Total Disbursements (D)
   131,355.59   —
(E) Ending Cash Balance (E= C-D)
   415.00   —
(F) Balance per Bank Statement (F)
   415.00   —
(G) Less Outstanding Checks (G)
   0.00   —
(H) Add Deposits in Transit
   0.00        
(I) Reconciled Bank Balance {I = (F-G) +H]
   415.00   —

Ending Cash Balance (E) and Reconciled Bank Balance (I) should equal.

4