Xybernaut Corporation produces wearable computer hardware, software, and services.

The original Complaint charges Xybernaut and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Complaint alleges that the Company omitted or misrepresented material facts about its financial condition, business prospects, revenue expectations and internal controls during the Class Period.

More specifically, the Complaint alleges that on or around March 14, 2005, Xybernaut announced that it was seeking an extension of time within which to file its annual report with the Securities and Exchange Commission. On March 31, 2005, after the close of trading, Xybernaut belatedly revealed that it was in dire financial and regulatory straits. The Company issued a press release that day, which stated, in part: "Xybernaut Corporation announced today that the filing of its Form 10-K and other related reports for the year ended December 31, 2004, anticipated to occur today, will be further delayed, pending completion of an internal investigation undertaken by its Audit Committee." The press release stated that independent Counsel had been engaged to assist in an internal investigation of, "among other things, concerns brought to the Audit Committee's attention relating to the internal control environment of the Company, the propriety of certain expenditures and the documentation of certain expenses of the Chairman and CEO of the Company, the Company's transparency and public disclosure process, the accuracy of certain public disclosures, management's conduct in response to the investigation, and the propriety of certain major transactions." The press release further stated that the Company had received a subpoena from the Northeast Regional Office of the SEC seeking "documents and other information relating to the sale of Company securities by any person identified as a selling shareholder in any Company registration statement or other public filing."

On this news, the Company's share price, which at one time had traded as high as $2.23 per share due to the Company's positive press releases and false and misleading representations during the Class Period, closed at $0.42 per share on March 31, 2005, and then dropped further by almost fifty percent (50%), to close at $0.24 per share on April 1, 2005.

The Complaint further alleges that on or around April 8, 2005, after the close of trading, Xybernaut announced in a press release that "investors and others should refrain from relying upon the Company's historical financial statements... for the years ended December 31, 2002 and 2003, and interim quarterly reports for the quarters ended March 31, 2003, June 30, 2003, September 30, 2003, March 31, 2004, June 30, 2004 and September 30, 2004." On the heels of this shocking news, trading was again heavy and the Company's price per share fell to $0.13 per share.

In April, 2005, the Company’s Chief Executive Officer and Chief Operating Officer were removed as officers and directors of the Company and, on July 25, 2005, Xybernaut filed a Chapter 11 bankruptcy petition with the United States Bankruptcy Court for the Eastern District of Virginia.

Beginning in July 2005, proposed class actions were filed in the United States District Court for the District of Delaware and also in the United States District Court for the Eastern District of Virginia. The Virginia Actions were assigned to the Honorable Leonie M. Brinkema. By order dated November 4, 2005, the Delaware Actions were transferred to this Court. In an order dated January 9, 2006, the Court: (1) consolidated the MDL Actions under the caption In re Xybernaut Corp. MDL Sec. Litig., No. 05-MD-1705 (the “Action”); (2) appointed Plaintiffs Khalid Nassera Abdulla Al Mesnad, Edward J. Paige, Nurol Menkul Kiymetler A.S., and Joyce R. Starr as lead Plaintiffs in the Action; and (3) approved lead Plaintiffs’ selection of Cohen, Milstein, Hausfeld & Toll P.L.L.C. and Murray, Frank & Sailer LLP as co-lead Counsel. On February 2, 2007, lead Plaintiffs filed a Consolidated Amended Class Action Complaint

On June 8, 2007, the Court granted the motions to dismiss filed by Defendants Thomas D. Davis and John F. Moynihan and dismissed all claims asserted against those individuals. The Court denied the motions filed by Defendants Weisberg, Steve Newman, and Edward Newman.

In July 2007, the parties commenced settlement negotiations. In total, the class received an all cash settlement of $6,300,000, which received final approval from the Court on or about February 20, 2008. Co-lead Counsel was awarded 30% of the Gross Settlement Fund and $139,502.31 in reimbursement of expenses.