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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                 ---------------

                                  FORM 10-KSB/A

               [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                    SECURITIES EXCHANGE ACT OF 1934

                    FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

               [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                    SECURITIES EXCHANGE ACT OF 1934

                    FOR THE TRANSITION PERIOD FROM ____________ TO ____________.
                         COMMISSION FILE NUMBER 0-21013

                                 ---------------
                              XYBERNAUT CORPORATION

                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

                           DELAWARE                     54-1799851
                    (State or other jurisdiction       (I.R.S. Employer
                         of incorporation or         Identification No.)
                           organization)

                12701 FAIR LAKES CIRCLE,
                         FAIRFAX, VA                          22033
          (Address of principal executive offices)         (Zip Code)


                                 (703) 631-6925
                (Issuer's telephone number, including area code)

SECURITIES  REGISTERED  UNDER SECTION 12(B) OF THE EXCHANGE ACT: none
SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:

                          Common stock, $0.01 par value

    Check  whether  the issuer  (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements for the past 90 days. Yes [X] No [
]

    Check if there is no disclosure of delinquent filers in response to Item 405
of  Regulation  S-B is not  contained in this form,  and no  disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB: [ ]

    State issuer's revenues for its most recent fiscal year: $3,340,272

    The  aggregate  market  value at April 19,  2000 of the Common  Stock of the
issuer, its only class of voting stock, was $415,722,208,  of which $347,937,078
was held by non-affiliates, calculated on the basis of the closing price of such
stock on the National  Association  of Securities  Dealers  Automated  Quotation
System  Small Cap  Market on that  date.  Such  market  value of  non-affiliates
excludes  shares owned by all  executive  officers and  directors  (but includes
shares owned by their spouses);  this should not be construed as indicating that
all such persons are affiliates.

    The number of shares  outstanding of the issuer's  Common Stock at April 19,
2000 was 37,159,527.

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE

    Transitional Small Business Disclosure Format  Yes  [ ]  No  [X]

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<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT.

DIRECTORS AND EXECUTIVE OFFICERS

     The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>

                                                                          YEAR FIRST
                                                                          ELECTED OR
         NAME                                    AGE         CLASS        APPOINTED               POSITION
         ----                                    ---         -----        ---------               --------

<S>                                              <C>                          <C>
         Edward G. Newman                        56           III             1990      President, Chief Executive
                                                                                        Officer and Chairman of the
                                                                                        Board of Directors
         John F. Moynahan                        42            --             --        Senior Vice President,
                                                                                        Treasurer and Chief
                                                                                        Financial Officer
         Steven A. Newman, M.D. (1)(2)(3)        54           III            1995       Executive Vice President and
                                                                                        Vice Chairman of the Board of Directors
         Kazuyuki Toyosato                       54            I             1998       Executive Vice President
                                                                                        and Director
         Dr. Edwin Vogt                          67            II            1998       Senior Vice President and
                                                                                        Director
         George Allen, Esq.                      48           III            1998       Director
         Martin Eric Weisberg, Esq. (1)(3)       49            I             1997       Secretary and Director
         Eugene J. Amobi                         55            II            1996       Director
         Keith P. Hicks, Esq. (2)                77            I             1994       Director
         Phillip E. Pearce (2)(3)                71            II            1995       Director
         James J. Ralabate, Esq                  72           III            1995       Director
         Lt. Gen. Harry E. Soyster (Ret.)(1)(3)  64            II            1995       Director

</TABLE>

-------------------------

(1)  Member of the Compensation Committee.
(2)  Member of the Audit Committee.
(3)  Member of the Nominating Committee.

     Officers  are  appointed  by and  serve at the  discretion  of the Board of
Directors.  The  Company's  Board of Directors  is divided into three  different
classes. At each annual meeting of stockholders,  one class of directors will be
elected for a term of three years to succeed those  directors in the class whose
terms then expire.  All directors  hold office until the third annual meeting of
shareholders  following their election or until their successors are elected and
qualified.

         The  following  is a brief  summary  of the  background  of each of our
directors.

CLASS I DIRECTORS

     Keith P. Hicks, Esq. has been a director since July 1994 and is currently a
principal  in  C&H  Properties  and  the  owner  of  Hicks  Bonding  Co.,  Hicks
Auctioneering  Co. and Hicks  Cattle  Company.  Mr.  Hicks is a graduate  of the
University  of  Denver  (B.A.  1954)  and  LaSalle   University  School  of  Law
(L.L.B. 1969).

     Kazuyuki Toyosato joined the Company in 1997 as Executive Vice President of
Asian  Operations.  Mr.  Toyosato is  responsible  for  overseeing the Company's
operations in Asia,  including Japan. Prior to joining the Company, Mr. Toyosato
spent 27 years with Sony  Corporation  in Japan where his last  position was the
Vice President of Sony USA. He previously helped manage the Sony Walkman product
line, and managed Sony's 8mm video camcorder and its battery line of products.

     Martin  Eric  Weisberg,  Esq.  who  currently  serves as  Secretary  of the
Company,  is a partner  of the law firm,  Parker  Chapin  LLP,  which  serves as
general  counsel  to the  Company.  Mr.  Weisberg  specializes  in the  areas of
securities,  mergers and acquisitions,  financing and international transactions
and has been in the  private  practice  of law for 24 years.  Mr.  Weisberg is a
summa cum laude  graduate of Union  College  (B.A.  1972) and  received  his law
degree from The Northwestern University School of Law (1975), where

                                       2

<PAGE>

he  graduated  summa cum laude,  was  Articles  Editor of the Law Review and was
elected to the Order of the Coif.  Mr.  Weisberg also attended The London School
of Economics and Political Science.

CLASS II DIRECTORS

     Eugene J. Amobi has been a director  of the  Company  since  January  1996.
Since 1983, Mr. Amobi has been President, a director and a principal stockholder
of Tech International, Inc. ("Tech International"),  which provides engineering,
technical  support  and  consulting  services to  government  and  domestic  and
international  commercial clients.  Mr. Amobi has been president and director of
Tech  International  of  Virginia  Inc.  ("Tech  Virginia"),   our  wholly-owned
subsidiary, since its spin-off from Tech International. Prior to 1983, Mr. Amobi
was a Senior  Engineer  with E.I.  DuPont de Nemours and a Managing  Director of
Stanley Consultants,  an international engineering consulting firm. Mr. Amobi is
a  graduate  of The  Technion,  Israel  Institute  of  Technology  (B.S.  1969),
Princeton University (M.S. 1970) and Syracuse University (M.B.A. 1973).

     Phillip E. Pearce has been a director of the Company  since  October  1995.
Mr. Pearce has been an  independent  business  consultant  with Phil E. Pearce &
Associates,  Chairman and Director of Financial  Express  Corporation since 1990
and since 1988 has been a principal of Pearce-Henry Capital Corp. Prior to 1988,
Mr. Pearce was Senior Vice President and a director of E.F. Hutton,  Chairman of
the Board of Governors of the National  Association  of  Securities  Dealers,  a
Governor of the New York Stock Exchange and a member of the Advisory  Council to
the United States Securities and Exchange  Commission on the Institutional Study
of the Stock  Markets.  Mr.  Pearce also is a director  of RX Medical  Services,
Inc., an operator of medical  diagnostic  facilities and clinical  laboratories,
InfoPower  International,   Inc.,  a  software  development  company,   StarBase
Corporation,  a software  development  company  and  Mustang  Software  Inc.,  a
software and services  company.  Mr.  Pearce is a graduate of the  University of
South Carolina (B.A. 1953) and attended the Wharton School of Investment Banking
at the University of Pennsylvania.

     Lt. Gen.  Harry E. Soyster  (Ret.) has been a director of the Company since
January  1995.  He is  currently  Director  of  Washington  Operations  and Vice
President  of  International  Operations  of  Military  Professional  Resources,
Incorporated. From 1988 until his retirement in 1991, Lieutenant General Soyster
(Ret.) was the Director of the United States Defense  Intelligence Agency. Prior
to that time,  he was  Commander  of the United  States  Army  Intelligence  and
Security  Command  and a  Deputy  Assistant  Chief of  Staff  for  Intelligence,
Department of the Army.  Lieutenant  General Soyster (Ret.) is a graduate of the
United States Military Academy at West Point (B.S.  1957), Penn State University
(M.S. 1963), the University of Southern  California (M.S. 1973) and the National
War College (1977).

     Dr.  Edwin Vogt was  appointed a director of the Company on  September  28,
1998 and joined the Company in December 1998 as Senior Vice President.  Prior to
this date,  Dr. Vogt served as a consultant to the Company since 1996.  Dr. Vogt
joined  IBM in 1961 as  Development  Programmer  and  worked  in the  fields  of
hardware development,  holding 28 patents, as well as software  development.  As
manager he was responsible for hardware  projects (IBM /360, /370, 433x) as well
as various  software  projects (a.o.  voice  recognition  products) before being
appointed   Director  as  manager  of  several  Hardware  and  Software  Product
Development  Laboratories.  As IBM Software Group  Executive,  Dr. Vogt held the
worldwide  responsibility  for the  development  and  marketing  of IBM Workflow
products and Reengineering  tools until retiring from IBM at the end of 1995. In
early 1996 he was appointed  Director for the SBS  association  (Softwarezentrum
Boeblingen  /  Sindelfingen  e.V.) and  directed the growth of this center to 39
member  companies  with over 200 experts,  predominantly  working in high-growth
areas such as Internet, Workflow, Process Automation and Multimedia. Dr. Vogt is
a graduate of the University of Stuttgart with a M.S. in Electrical  Engineering
and Mathematics in Theoretical Electrical Engineering.

CURRENT CLASS III DIRECTORS

     George  Allen,  Esq. is a partner of the law firm of McGuire Woods Battle &
Boothe, LLP. Mr. Allen was Virginia's 67th governor from 1994-1998, during which
period  state taxes were cut by $1 billion  and $14  billion in new  investments
were made in the state  resulting in 300,000 net new private  sector  jobs.  Mr.
Allen's term in office also was noted for  comprehensive  reforms in primary and
secondary  education,  the abolition of parole,  reform of the juvenile  justice
systems and the  replacement  of the welfare  system with reforms  which promote
work  ethic  and  personal  responsibility.  Prior to  serving  as  Governor  of
Virginia,  Mr. Allen was a member of the U.S. House of  Representatives  in 1991
and a member of the Virginia House of Delegates from  1983-1991.  Mr. Allen is a
member of the Board of Directors of Commonwealth  Biotechnology,  Inc. Mr. Allen
is a graduate of the University of Virginia at Charlottesville(B.A.  1974), with
distinction,  and  received  his law degree from the  University  of Virginia at
Charlottesville (J.D. 1977).

     Edward G. Newman has been the Company's  President since March 1993,  Chief
Executive  Officer and Chairman of the Board of Directors  since  December 1994,
and a director since 1990. Mr. Newman served as our Treasurer from 1993 to 1994.
From  1984 to

                                       3
<PAGE>

1992,  Mr.  Newman was President of  ElectroTech  International  Corporation,  a
software  consulting  firm.  From 1973 to 1981, Mr. Newman was employed by Xerox
Corporation in several  management  positions in office systems strategy,  legal
systems and international  financial systems. Mr. Newman served with the Central
Intelligence  Agency from 1966 to 1972.  Mr.  Newman also has been an  Executive
Vice  President  of Tech  International  since  1990,  and a director  and Chief
Executive  Officer of Tech Virginia since 1994. See "Certain  Relationships  and
Related  Transactions."  Mr. Newman is a graduate of the  University of Maryland
(B.A.  1971) and the  University of New Haven (M.B.A.  1984).  Mr. Newman is the
brother of Steven A. Newman, M.D., an Executive Vice President and a director of
the Company.

     Steven A. Newman,  M.D. has been an Executive Vice President of the Company
since January  2000, a director of the Company since January 1995,  and the Vice
Chairman of the Board of Directors  since August 1997. See "Business - Employees
and Consultants." Dr. Newman was the Executive Vice President and Secretary from
December  1994  through  October 1995 and a  consultant  of the Company  between
January 1996 and December  1999. Dr. Newman also provides  business,  management
and administrative  consulting  services to various medical and business groups.
Dr. Newman was President and Chief  Executive  Officer of Fed American,  Inc., a
mortgage banking firm, from 1988 to 1991. Dr. Newman has been a director of Tech
Virginia since 1994. See "Certain  Relationships and Related  Transactions." Dr.
Newman is also a director of Kanakaris  Communications Inc., an internet content
company.  Dr.  Newman is a graduate  of  Brooklyn  College  (B.A.  1967) and the
University  of Rochester  (M.D.  1972).  Dr.  Newman is the brother of Edward G.
Newman,  our  President,  Chief  Executive  Officer and Chairman of the Board of
Directors.

     James J.  Ralabate,  Esq. has been a director of the Company  since January
1995 and served as our Secretary until August 1997. Mr. Ralabate has been in the
private  practice of patent law since 1982. Prior to that time, Mr. Ralabate was
General Patent Counsel for Xerox  Corporation,  responsible for worldwide patent
licensing and litigation, and an examiner for the Patent Office. Mr. Ralabate is
our  intellectual  property  counsel and is a graduate of Canisius College (B.S.
1950) and The American University (J.D. 1959).

ADVISORY BOARD

     The Company  also has an Advisory  Board which was  established  to provide
council and support to the Board of Directors. The members of the Advisory Board
are appointed by the Board of Directors. Its members currently include:

     Lawrence Berk is currently Senior Managing Director of Brill Securities. He
has been a money manager and has structured and advised  companies on financings
and strategic planning,  having held executive positions with several investment
banking firms,  including Oppenheimer & Co. where he was a partner.  He was a
member of the Board of the Actors  Studio for 15 years where he produced  plays;
a founding Chairman of the Veterans Ensemble Theatre, a group of writers,
actors  and  directors  from  the  Vietnam  war;  he  was on  the  Board  of the
Association of American Dance  Companies;  and a trustee of the Manhattan
Theatre  Club.  Mr.  Berk  is a  member  of  the  Financial  Investment  Analyst
Association and the Regional Investment Bankers Association.

     Dr. Andrew Heller has been an advisor to the Board of Directors since 1995.
Since 1989 Dr.  Heller has been Chairman and Chief  Executive  Officer of Heller
Associates,  a consulting firm to high technology  companies.  From 1990 to 1993
Dr.  Heller was Chairman and Chief  Executive  Officer of Hal Computer  Systems,
Inc., a software and hardware systems development company. From 1966 to 1989 Dr.
Heller was employed by IBM (where he was the youngest person ever to be selected
as an IBM  Fellow) in a variety of  positions  including  Corporate  Director of
Advanced  Technology  Systems,  member of the Executive Committee on Technology,
member of the Technical Review Board, and General Manager,  Advanced Workstation
Independent Business Unit. While at IBM, Dr. Heller created and ran the business
unit that created the AIX (UNIX)  operating  system for IBM and the RISC RS/6000
family  of  workstations  and  servers,  from  which  the  current  Power PC was
developed.  Dr. Heller is a director of Rambus,  Inc.,  Cross/Z,  Inc.,  Network
Translation,  Inc., EPR, Inc., Eco Instrumentation,  Inc. and UDI Software, Inc.
We have a three-year consulting agreement with Dr. Heller whereby he provides us
with strategic planning, business management,  strategic product development and
market and financial introduction services.

     Vice Admiral  Stephan F. Loftus (ret.)  retired from the United States Navy
in May of 1994.  Prior to that he served as the Deputy Chief of Naval Operations
(Logistics).  Vice Admiral Loftus held previous  positions with the U.S. Navy as
Commander, Fleet Air Mediterranean;  Director, Office of Budget and Reports; and
Director,  Office of Program Appraisal.  Vice Admiral Loftus presently serves as
Executive Vice President of Quarterdeck Investment Partners,  Inc. (specializing
in merger/acquisitions)  and The Spectrum Group (a strategic planning group). He
consults for Lockheed  Martin  Corporation,  SAIC,  Johns  Hopkins  University -
Applied  Physics  Lab,  Systems  Planning   Corporation,   and  Global  Planning
Corporation.  He is on the Board of Directors of AMSEC,  Inc. and LLD, Inc., and
serves as a member of the Logistics Panel for the Defense  Science Board.  Also,
Admiral  Loftus  serves  as the  Chairman  of the  Board  of  Trustees  at NMCCG
Foundation.

                                       4
<PAGE>

     Dr.  Steve Mann is  currently a faculty  member at  University  of Toronto,
Department of Electrical  and Computer  Engineering.  His work in using wearable
computers  to capture  and enhance the world  around us was  highlighted  in his
award-winning  documentary  "Shooting  Back." Dr.  Mann has been  involved  with
various forms of wearable  computing  since the 1970s,  starting with the use of
computers in photography. Dr. Mann was the founder and Publications Chair of the
first Institute of Electrical and  Electronics  Engineers  (IEEE)  International
Symposium on Wearable  Computing.  Dr. Mann chaired the first  Special  Issue on
Wearable  Computing in Personal  Technologies  Journal,  and has given  numerous
keynote  addresses  on wearable  computers,  including  the Third  International
Conference  on Wearable  Computers,  the  Virtual  Reality  conference,  and the
McLuhan  Conference on Culture and  Technology.  He received his PhD degree from
Massachusetts Institute of Technology in 1997 in the Humanistic Intelligence.

     General Richard H. Thompson (ret.) retired from the U.S. Army in 1987 after
43 years of service.  His last  assignment was as the Commander of the U.S. Army
Material  Command,  an  organization  of  132,000  personnel  at  171  locations
worldwide with an annual budget in excess of $35 billion.  Since his retirement,
General Thompson has served on the Board of Directors of several companies,  has
consulted with many others,  and has  participated  as a member of several Study
Groups for the National Academy of Sciences and the House of Representatives. He
is currently the Chairman and Chief  Executive  Officer and actively  engaged in
the operations of three companies he has established: Thompson Delstar Inc., TMI
Asia, and TDIS.

CERTAIN  INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF
DIRECTORS

     The Board of Directors is  responsible  for the  management of the Company.
The Board has established the following three  committees:  Audit,  Compensation
and Nominating.

     The functions of the Audit Committee  include the nomination of independent
auditors for appointment by the Board;  meeting with the independent auditors to
review  and  approve  the  scope of their  audit  engagement;  meeting  with the
Company's  financial  management and the independent  auditors to review matters
relating to internal accounting controls, the Company's accounting practices and
procedures and other matters relating to the financial condition of the Company;
and to report to the Board periodically with respect to such matters.  The Audit
Committee currently consists of Keith P. Hicks, Dr. Steven A. Newman and Phillip
E. Pearce.

     The function of the  Compensation  Committee is to review and  recommend to
the Board of Directors the appropriate compensation of executive officers and to
administer the 1996 Omnibus Stock  Incentive Plan, the 1997 Stock Incentive Plan
and the 1999 Stock Incentive Plan. The Compensation Committee currently consists
of Dr.  Steven A.  Newman,  Lt.  Gen.  Harry E.  Soyster  (Ret.) and Martin Eric
Weisberg, Esq.

     The function of the Nominating  Committee is to select and recommend to the
Board  of  Directors  appropriate  candidates  for  election  to  the  Board  of
Directors.  The Nominating Committee currently consists of Dr. Steven A. Newman,
Lt. Gen. Harry E. Soyster (Ret.) and Martin Eric Weisberg, Esq.

             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's  directors and executive  officers,  and persons who own more than
10% of the Company's  Common  Stock,  to file with the  Securities  and Exchange
Commission  (the "SEC")  initial  reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company.  Officers,
directors and greater than 10%  shareholders  are required by SEC  regulation to
furnish the Company with copies of all Section  16(a)  reports they file. To the
Company's  knowledge,  based  solely  on review  of the  copies of such  reports
furnished  to the Company  during the one-year  period ended  December 31, 1999,
certain Section 16(a) filing requirements applicable to its officers,  directors
and greater  than  ten-percent  beneficial  owners were not  complied  with in a
timely  manner by certain  directors,  and greater than  ten-percent  beneficial
owners,  including  the  following:  (i) each of Messrs.  Allen,  Amobi,  Hicks,
Moynahan, Pearce, Ralabate,  Soyster, Toyosato, Vogt and Weisberg did not timely
file a Form 5 with the SEC and (ii) Dr.  Steven A.  Newman did not timely file a
Form 4 with the SEC with respect to one transaction.

ITEM 10.   EXECUTIVE COMPENSATION.

EXECUTIVE COMPENSATION

                                       5
<PAGE>

         SUMMARY  COMPENSATION  TABLE.  The following  sets forth the annual and
long-term  compensation  for services in all  capacities  to the Company for the
fiscal  years  ended  December  31,  1999,  1998 and 1997 paid to (i)  Edward G.
Newman,  the  President,  Chief  Executive  Officer and Chairman of the Board of
Directors of the Company,  (ii) Kazuyuki  Toyosato,  an Executive Vice President
and  Director of the Company,  (iii) Dr.  Steven A.  Newman,  an Executive  Vice
President and Vice Chairman of the Board of Directors of the Company,  (iv) John
F. Moynahan,  Chief Financial Officer,  Treasurer and a Senior Vice President of
the Company,  (v) Dr. Edwin Vogt,  a Senior Vice  President  and Director of the
Company and (vi) Hussein Sallam, a former Vice President of the Company.

                           SUMMARY COMPENSATION TABLE

                                       5
<PAGE>
<TABLE>
<CAPTION>

                                                                                           LONG TERM
                                                                                         COMPENSATION
                                                                                         ------------
                                                      ANNUAL COMPENSATION                   AWARDS
             NAME AND                              ---------------------------              OPTIONS      ALL OTHER
        PRINCIPAL POSITION                  YEAR         SALARY                 BONUS      (SHARES)    COMPENSATION
        ------------------                  ----         ------                 -----      --------    ------------

<S>                                        <C>         <C>       <C>            <C>       <C>               <C>      <C>
EDWARD G. NEWMAN                           1999        $223,294  (1)            $0         441,665          $35,400  (2)
  President and Chief Executive            1998        $250,923  (1)            $0               0          $47,400  (2)
  Officerand Chairman of the Board of      1997        $224,687  (1)            $0               0          $53,235  (2)
  Directors

KAZUYUKI TOYOSATO                          1999        $251,676                 $0         110,000          $28,385  (2)
  Executive Vice President and             1998        $172,086                 $0          10,000          $     0
  Director                                 1997         $77,188  (3)            $0          50,000          $     0

DR. STEVEN A. NEWMAN                       1999         $13,476  (4)            $0         441,750         $176,550  (5)
  Executive Vice President and Vice        1998         $13,476  (4)            $0          10,000         $163,476  (5)
  Chairman of the Board of Directors       1997         $13,476  (4)            $0         100,000         $163,476  (5)

JOHN F. MOYNAHAN                           1999         $82,288  (6)            $0         331,741          $16,500  (2)
  Senior Vice President, Chief             1998         $93,507  (6)            $0               0          $ 7,500  (2)
  Financial Officer and Treasurer          1997        $142,083                 $0               0          $15,465  (2)

DR. EDWIN VOGT                             1999        $138,319               $6,538       135,000          $     0
  Senior Vice President and Director       1998               0  (7)            $0          70,000 (8)      $61,000  (7)
                                           1997               0                 $0               0          $32,000  (7)

HUSSEIN SALLAM                             1999        $117,320  (9)            $0          3,484           $15,000  (2)
  Vice President                           1998        $115,000                 $0         10,000            $1,727  (2)
                                           1997        $  9,852  (9)            $0         50,000             $   0

</TABLE>

------------------

(1)  Includes  $13,476  paid by Tech  Virginia  in each of 1999,  1998 and 1997.
     Compensation does not include $53,732,  $50,000 and $50,000 paid to Frances
     C. Newman, wife of Edward G. Newman in 1999, 1998 and 1997, respectively.

(2)  Includes payment of  non-accountable  expense allowances and transportation
     allowances, but not reimbursement of expenses.

(3)  Represents  compensation for an eight month period. Mr. Toyosato joined the
     Company in 1997 and joined the Board of Directors in 1998.

(4)  Dr.  Newman is an officer and director of Tech Virginia and was hired as an
     Executive  Vice  President of the Company on January 1, 2000.  Compensation
     represents  payments  made to Dr.  Newman in his capacity as an employee of
     Tech Virginia.

(5)  Compensation  includes  (i)  consulting  fees  paid  to Dr.  Newman  in his
     capacity as a consultant  to the Company  prior to January 1, 2000 and (ii)
     non-accountable expense allowances.  Compensation excludes reimbursement of
     expenses  of  $21,595,  $63,469 and  $23,789  during  1999,  1998 and 1997,
     respectively.

(6)  Mr. Moynahan resigned from his positions with the Company effective June 3,
     1998 and resumed these positions effective May 10, 1999.

                                       6
<PAGE>

(7)  Dr.  Vogt was hired as an  employee  of the  Company in  December  1998 and
     joined the Board of Directors in September  1998.  Prior to December  1998,
     Dr. Vogt served as a consultant  to the Company.  Compensation  in 1998 and
     1997  represents  consulting  fees paid to Dr.  Vogt in his  capacity  as a
     consultant  to the Company  prior to his  employment  in December  1998 and
     excludes  reimbursement  of expenses of $10,985 and $10,250 during 1998 and
     1997, respectively.

(8)  Includes a grant of 20,000  shares of Common  Stock and options to purchase
     50,000 shares of Common Stock.

(9)  Mr.  Sallam was hired as an employee  of the  Company in December  1997 and
     resigned from his position with the Company in December 1999.

     OPTION GRANTS TABLE.  The following table sets forth  information on grants
of stock options  during fiscal 1999 to executive  officers and directors of the
Company. All such options are exercisable to purchase shares of Common Stock.

<TABLE>
<CAPTION>

                                          OPTIONS     PERCENT OF TOTAL     EXERCISE OR
                                          GRANTED     OPTIONS GRANTED TO    BASE PRICE
            NAME                          (SHARES)    EMPLOYEES IN YEAR     ($/SHARE)     EXPIRATION DATE
            ----                          --------    -----------------     ---------     ---------------
<S>                                         <C>           <C>                <C>                  <C> <C>
            George Allen                    10,000        0.3022%            $1.5625       August 27, 2009

            Eugene J. Amobi                 60,000        1.8131%            $1.5625       August 27, 2009
                                           100,000        3.0218%            $5.4375     December 28, 2009

            Keith Hicks, Esq.               10,000        0.3022%            $1.5625       August 27, 2009

            John F. Moynahan               150,000        4.5327%            $3.7188         May 10,  2009
                                            31,741        0.9592%            $1.7800    September 10, 2009
                                           150,000        4.5327%            $4.0938      December 3, 2009

            Edward G. Newman                41,665        1.2590%            $1.7800    September 10, 2009
                                           300,000        9.0654%            $1.3750       October 1, 2009
                                           100,000        3.0218%            $4.0938      December 3, 2009

            Dr. Steven A. Newman            10,000        0.3022%            $1.5625       August 27, 2009
                                            31,750        0.9594%            $1.7800    September 24, 2009
                                           300,000        9.0654%            $1.3750       October 1, 2009
                                           100,000        3.0218%            $4.0938      December 3, 2009

            Phillip E. Pearce               10,000        0.3022%            $1.5625       August 27, 2009
                                            50,000        1.5109%            $5.4375     December 28, 2009

            James J. Ralabate, Esq.         70,000        2.1153%            $1.5625       August 27, 2009

            Hussein Sallam (1)               3,484        0.1053%            $1.6000    September 24, 2009

            Lt. Gen. Harry E. Soyster       10,000        0.3022%            $1.5625       August 27, 2009
                                            50,000        1.5109%            $5.4375     December 28, 2009

            William Tauskey (2)            494,000       14.9277%            $4.0938     December 3,  2009

            Kazuyuki Toyosato               10,000        0.3022%            $1.5625       August 27, 2009
                                           100,000        3.0218%            $4.0938      December 3, 2009

            Dr. Edwin Vogt                  10,000        0.3022%            $1.5625       August 27, 2009
                                            25,000        0.7555%            $1.7800    September 24, 2009
                                            50,000        1.5109%            $5.4375     December 28, 2009

            Martin Eric Weisberg, Esq.      35,000        1.0577%            $1.5625       August 27, 2009

</TABLE>

                                       7
<PAGE>

----------
(1)  Mr.  Sallam was hired as an employee  of the  Company in December  1997 and
     resigned from his positions with the Company in December 1999.

(2)  The Company has reserved options to purchase up to 494,000 shares of Common
     Stock under its stock  option plan for a  contingent  grant to Mr.  William
     Tauskey,  an Executive  Vice  President  of the  Company.  The grant to Mr.
     Tauskey is contingent upon the  establishment of appropriate  goals for the
     vesting of the options which are  satisfactory  to the  Company's  Board of
     Directors and Mr.  Tauskey  entering into an employment  agreement with the
     Company  on  terms  and  conditions  satisfactory  to the  Company  and Mr.
     Tauskey.

FISCAL YEAR-END OPTIONS/OPTION VALUES TABLE.
<TABLE>
<CAPTION>

                                             NUMBER OF SECURITIES          VALUE OF UNEXERCISED
                                            UNDERLYING UNEXERCISED         IN-THE-MONEY OPTIONS
                                          OPTIONS AT FISCAL YEAR-END      AT FISCAL YEAR-END ($)
                                          --------------------------      ----------------------
             NAME                         EXERCISABLE    UNEXERCISABLE    EXERCISABLE  UNEXERCISABLE
             ----                         -----------    -------------    -----------  -------------
<S>                                         <C>                      <C>      <C>                <C>
             George Allen                   60,000                   0        38,125             0
             Eugene J. Amobi               130,000             100,000       383,750             0
             Keith Hicks, Esq.              80,000                   0       193,125             0
             John F. Moynahan               60,580             271,161       102,095       452,630
             Edward G. Newman              413,888              27,777     1,378,047        99,858
             Dr. Steven A. Newman          540,583              21,167     1,697,416        76,095
             Phillip E. Pearce             130,000                   0        74,375             0
             James J. Ralabate, Esq.       140,000                   0       421,875             0
             Hussein Sallam (1)             43,484                   0       129,050             0
             Lt. Gen. Harry E. Soyster     130,000                   0       193,125             0
             William Tauskey (2)              0                494,000             0       632,913
             Kazuyuki Toyosato              70,000             100,000       176,875       128,120
             Dr. Edwin Vogt                 78,333             106,667        81,833       114,917
             Martin Eric Weisberg, Esq.    105,000                   0       297,813             0

</TABLE>
---------------
(1)  Mr.  Sallam was hired as an employee  of the  Company in December  1997 and
     resigned from his position with the Company in December 1999.

(2)  The Company has reserved options to purchase up to 494,000 shares of Common
     Stock under its stock  option plan for a  contingent  grant to Mr.  William
     Tauskey,  an Executive  Vice  President  of the  Company.  The grant to Mr.
     Tauskey is contingent upon the  establishment of appropriate  goals for the
     vesting of the options which are  satisfactory  to the  Company's  Board of
     Directors and Mr.  Tauskey  entering into an employment  agreement with the
     Company  on  terms  and  conditions  satisfactory  to the  Company  and Mr.
     Tauskey.

     The foregoing options were exercisable  within 60 days of December 31, 1999
with  respect to in the  aggregate  1,981,868  shares of Common  Stock.

     The Company has no retirement,  pension or profit  sharing  program for the
benefit  of its  directors,  officers  or  other  employees,  but the  Board  of
Directors may recommend one or more such programs for adoption in the future.

PROFIT SHARING PROGRAM

     The  Company   intends  to  establish  a  profit  sharing   program  to  be
administered by the Board of Directors. Under this program, which will remain in
effect for five years unless extended by the Board of Directors, executives, key
employees and consultants  will be eligible to participate in a cash bonus pool.
The amount of the cash bonus pool will be determined  annually and will be up to
10%  of  the  amount  by  which  the  Company's  pretax  income  exceeds  10% of
stockholders' equity.

                                       8
<PAGE>

EMPLOYMENT AGREEMENTS

     The Company has entered into an employment  agreement with Edward G. Newman
dated as of January 1, 2000 that provides for a three-year term through December
31,  2002.  This  agreement  calls for an initial  base salary of $250,000  with
annual  increases at the United States  Consumer Price Index ("CPI")  percentage
plus three  percent,  subject to a ceiling  of 10%;  an annual  cash bonus to be
determined by the Board of Directors; a $2 million life insurance policy payable
to his  designated  beneficiaries;  and an annual  grant of stock  options to be
determined  by  increases  in revenues or market  capitalization  over the prior
year,  at the price in effect  at the time such  grant is made,  with a limit on
such  grant of the  greater of  500,000  shares or 1.5% of the  then-outstanding
stock in any given year ("Performance  Options").  As an incentive to enter into
this agreement,  Mr. Newman received an initial payment of $50,000. In the event
of a change of control or Mr. Newman  terminating his employment for good cause,
Mr. Newman is entitled to a severance payment of the greater of two years or the
remaining  term of this  agreement and the  Performance  Options for the year of
termination  and the following  year.  This  agreement  provides Mr. Newman with
benefits  which the  Company  may provide to its  executive  officers  including
health care insurance, automobile allowance and vacation.

     The Company has entered into an employment  agreement with John F. Moynahan
dated as of January 1, 2000 that provides for a three-year term through December
31,  2002.  This  agreement  calls for an initial  base salary of $170,000  with
annual  increases at the CPI percentage  plus three percent subject to a ceiling
of 10%;  an annual  cash bonus to be  determined  by the Board of  Directors;  a
$750,000 life insurance policy payable to his designated  beneficiaries;  and an
annual  grant of stock  options to be  determined  by  increases  in revenues or
market  capitalization  over the prior year,  at the price in effect at the time
such grant is made,  with a limit on such grant of the greater of 100,000 shares
or 0.33% of the  then-outstanding  stock in any given year.  As an  incentive to
enter into this agreement,  Mr. Moynahan received an initial payment of $25,000.
In the event of a change of control or Mr.  Moynahan  terminating his employment
for good cause,  Mr. Moynahan is entitled to a severance  payment of the greater
of two years or the remaining term of this agreement,  the  Performance  Options
for the year after  termination and the following year, and immediate vesting of
options.  This agreement  provides Mr.  Moynahan with benefits which the Company
may provide to its  executive  officers  and  including  health care  insurance,
automobile allowance and vacation.

     The Company has entered into an  employment  agreement  with Dr.  Steven A.
Newman dated as of January 1, 2000 that  provides for a three-year  term through
December 31, 2002.  This agreement  calls for an initial base salary of $225,000
with annual  increases at the CPI percentage  plus three  percent,  subject to a
ceiling of 10%; an annual cash bonus to be determined by the Board of Directors,
with a minimum  bonus of  $100,000  set for 2000;  a $2 million  life  insurance
policy  payable to his  designated  beneficiaries;  and an annual grant of stock
options to be determined by increases in revenues or market  capitalization over
the prior  year,  at the price in effect at the time such grant is made,  with a
limit  on  such  grant  of  the  greater  of  500,000  shares  or  1.5%  of  the
then-outstanding  stock in any given year.  As an  incentive  to enter into this
agreement,  Dr. Newman received an initial payment of $50,000. In the event of a
change of control or Dr. Newman  terminating his employment for good cause,  Dr.
Newman is  entitled  to a  severance  payment of the greater of two years or the
remaining term of this agreement, and the Performance Options for the year after
termination  and the following  year.  This  agreement  provides Dr. Newman with
benefits  which the  Company  may provide to its  executive  officers  including
health care insurance, automobile allowance and vacation.

     Mr. Toyosato is employed pursuant to a three-year employment agreement with
a term  expiring  on March 3, 2000.  The  employment  agreement  provided  for a
minimum annual salary of $153,575.23.


CONSULTING AGREEMENTS

     The Company and Dr.  Steven A. Newman  entered into a consulting  agreement
dated as of January 1, 1996, as amended January 1, 1997, which was superseded by
the January 1, 2000 employment agreement.  Pursuant to the consulting agreement,
Dr. Newman provided consulting services which included,  among other things, the
review and assistance in the preparation of the Company's  business  strategies,
assisting with the recruitment and hiring of key executives and providing advice
regarding financing,  contracting,  management,  overseas operations,  strategic
alliances  and ventures.  The annual  consulting  fee was $150,000  payable on a
monthly   basis.   The   consulting   agreement  also  provided  for  additional
compensation,  as  determined  by  the  Company's  Compensation  Committee,  for
services  by  Dr.  Newman  in  connection  with  the  successful  completion  of
financings,  mergers,  acquisitions,  dispositions,  joint  ventures  and  other
material transactions. The term of the consulting agreement was four years.

                                       9
<PAGE>

OMNIBUS STOCK INCENTIVE PLAN

     The 1996  Omnibus  Stock  Incentive  Plan (the "1996  Incentive  Plan") was
adopted by the Company's Board of Directors  effective January 1, 1996. The 1996
Incentive Plan provides for the granting of incentive stock options  ("Incentive
Stock Options")  within the meaning of Section 422 of the Internal  Revenue Code
of 1986, as amended (the "Code"), nonqualified stock options, stock appreciation
rights  ("SARs")  and  grants  of  shares of Common  Stock  subject  to  certain
restrictions ("Restricted Stock") up to a maximum of 650,000 shares to officers,
directors,  employees and others. Incentive Stock Options can be awarded only to
employees  of the  Company  at the  time  of the  grant.  No  options,  SARs  or
restricted  stock  ("Restricted  Stock") may be granted under the 1996 Incentive
Plan  subsequent  to December  31, 2006.  To date,  options have been granted to
purchase all of the 650,000  shares of Common Stock  reserved for issuance under
the 1996 Incentive Plan.

     The 1996 Incentive Plan is  administered by the  Compensation  Committee of
the  Board  of  Directors  (subject  to the  authority  of  the  full  Board  of
Directors),  which determines the terms and conditions of the options,  SARs and
Restricted  Stock granted under the 1996 Incentive Plan,  including the exercise
price,  number of shares subject to the option and the  exercisability  thereof.
Dr. Steven A. Newman, Lt. Gen. Harry E. Soyster (Ret.) and Martin Eric Weisberg,
Esq. currently are the members of the Compensation Committee.

     The exercise  price of all Incentive  Stock Options  granted under the 1996
Incentive  Plan must equal at least the fair market value of the Common Stock on
the date of grant.  In the case of an optionee  who owns stock  possessing  more
than 10% of the  total  combined  voting  power of all  classes  of stock of the
Company  ("Substantial  Stockholders"),  the exercise  price of Incentive  Stock
Options  must be at least 110% of the fair market  value of the Common  Stock on
the date of grant. The exercise price of all nonqualified  stock options granted
under the 1996 Incentive Plan shall be determined by the Compensation Committee.
The term of any Incentive Stock Option granted under 1996 the Incentive Plan may
not exceed ten years,  or, for Incentive  Stock Options  granted to  Substantial
Stockholders,  five years.  The 1996 Incentive Plan may be amended or terminated
by the  Board of  Directors,  but no such  action  may  impair  the  rights of a
participant under a previously granted option.

                                       9
<PAGE>

     The 1996 Incentive Plan provides the Board of Directors or the Compensation
Committee the  discretion to determine  when options  granted  thereunder  shall
become exercisable and the vesting period of such options. Upon termination of a
participant's employment or relationship with the Company, all options terminate
and no longer are exercisable  unless termination is due to death or disability,
in which case the options are exercisable  within one year of  termination.  The
Compensation Committee has granted extensions of the period before which options
may be exercised for certain terminated employees.

     The 1996  Incentive  Plan  provides  that upon a change in  control  of the
Company,  all  previously  granted  options and SARs  immediately  shall  become
exercisable  in full and all  Restricted  Stock  immediately  shall vest and any
applicable restrictions shall lapse. The 1996 Incentive Plan defines a change of
control as the consummation of a tender offer for 25% or more of the outstanding
voting securities of the Company,  a merger or consolidation of the Company into
another  corporation less than 75% of the outstanding voting securities of which
are owned in aggregate by the stockholders of the Company  immediately  prior to
the merger or  consolidation,  the sale of  substantially  all of the  Company's
assets  other  than to a  wholly-owned  subsidiary,  or the  acquisition  by any
person,  business or entity other than by reason of  inheritance  of over 25% of
the Company's outstanding voting securities. The change of control provisions of
the 1996 Incentive Plan may operate as a material  disincentive or impediment to
the consummation of any transaction which could result in a change of control.

     The 1996 Incentive Plan provides the Board of Directors or the Compensation
Committee discretion to grant SARs in connection with any grant of options. Upon
the exercise of a SAR, the holder shall be entitled to receive a cash payment in
an  amount  equal to the  difference  between  the  exercise  price per share of
options  then  exercised by him and the fair market value of the Common Stock as
of the exercise  date. The holder is required to exercise  options  covering the
number  of  shares,  which are  subject  to the SAR so  exercised.  SARs are not
exercisable  during  the first six  months  after the date of grant,  and may be
transferred only by will or the laws of descent and distribution.

     The 1996  Incentive  Plan  also  provides  the  Board of  Directors  or the
Compensation  Committee  discretion to grant to key persons shares of Restricted
Stock  subject to certain  limitations  on  transfer  and  substantial  risks of
forfeiture.

1997 STOCK INCENTIVE PLAN

     The 1997 Stock  Incentive Plan (the "1997  Incentive  Plan") was adopted by
the  Company's  Board of Directors on April 10, 1997.  The 1997  Incentive  Plan
provides  for the  granting of  Incentive  Stock  Options  within the meaning of
Section 422 of the Code,  nonqualified stock options,  SARs and grants of shares
of Common Stock subject to certain restrictions (collectively, "Awards") up to a
maximum of 1,650,000  shares to officers,  directors,  key employees and others.
Incentive  Stock  Options can be awarded only to

                                       10
<PAGE>

employees of the Company at the time of the grant.  No ISO may be granted  under
the 1997 Incentive Plan after April 9, 2007.

     The 1997  Incentive  Plan is  administered  by the Board of  Directors or a
Committee of the Board of Directors,  which  determines the terms and conditions
of the Awards  granted  under the 1997  Incentive  Plan,  including the exercise
price,  number of shares subject to the option and the  exercisability  thereof.
Dr. Steven A. Newman, Lt. Gen. Harry E. Soyster (Ret.) and Martin Eric Weisberg,
Esq. currently are the members of the Committee.

     The exercise  price of all Incentive  Stock Options  granted under the 1997
Incentive  Plan must equal at least the fair market value of the Common Stock on
the date of grant. In the case of Substantial  Stockholders,  the exercise price
of Incentive Stock Options must be at least 110% of the fair market value of the
Common Stock on the date of grant. The exercise price of all nonqualified  stock
options  granted  under  the 1997  Incentive  Plan  shall be  determined  by the
Compensation Committee. The term of any Incentive Stock Option granted under the
1997  Incentive Plan may not exceed ten years,  or, for Incentive  Stock Options
granted to Substantial Stockholders,  five years. The 1997 Incentive Plan may be
amended or terminated  by the Board of Directors,  but no such action may impair
the rights of a participant under a previously granted option.

     The 1997  Incentive Plan provides the Committee the discretion to determine
when options granted  thereunder shall become exercisable and the vesting period
of such options. Upon termination of a participant's  employment or relationship
with the Company, options may be exercised only to the extent exercisable on the
date of such  termination  (within three  months),  but not  thereafter,  unless
termination  is due to  death or  disability,  in which  case  the  options  are
exercisable within one year of termination.

     The 1997 Incentive Plan provides the Committee  discretion to grant SARs to
key employees,  consultants and directors.  Promptly after exercise of a SAR the
holder  shall be entitled  to receive in chase,  by check or in shares of Common
Stock,  an amount  equal to the excess of the fair market  value on the exercise
date of the  shares of Common  Stock as to which the SAR is  exercised  over the
base price of such shares, which shall be determined by the Committee

     The 1997 Incentive Plan also provides the Committee  discretion to grant to
key persons  shares of  restricted  stock subject to certain  contingencies  and
restrictions as the Committee may determine.

1999 STOCK INCENTIVE PLAN

     The 1999 Stock  Incentive Plan (the "1999  Incentive  Plan") was adopted by
the Company's  Board of Directors on November 12, 1999.  The 1999 Incentive Plan
provides  for the  granting of  Incentive  Stock  Options  within the meaning of
Section 422 of the Code,  nonqualified stock options,  SARs and grants of shares
of Common Stock subject to certain restrictions (collectively, "Awards") up to a
maximum of 3,000,000  shares to officers,  directors,  key employees and others.
Incentive  Stock  Options can be awarded only to employees of the Company at the
time of the grant.  No ISO may be granted  under the 1999  Incentive  Plan after
November 12, 2009.

     The 1999  Incentive  Plan is  administered  by the Board of  Directors or a
Committee of the Board of Directors,  which  determines the terms and conditions
of the Awards  granted  under the 1999  Incentive  Plan,  including the exercise
price,  number of shares subject to the option and the  exercisability  thereof.
Dr. Steven A. Newman, Lt. Gen. Harry E. Soyster (Ret.) and Martin Eric Weisberg,
Esq. currently are the members of the Committee.

     The exercise  price of all Incentive  Stock Options  granted under the 1999
Incentive  Plan must equal at least the fair market value of the Common Stock on
the date of grant. In the case of Substantial  Stockholders,  the exercise price
of Incentive Stock Options must be at least 110% of the fair market value of the
Common Stock on the date of grant. The exercise price of all nonqualified  stock
options  granted  under  the 1999  Incentive  Plan  shall be  determined  by the
Compensation Committee. The term of any Incentive Stock Option granted under the
1999  Incentive Plan may not exceed ten years,  or, for Incentive  Stock Options
granted to Substantial Stockholders,  five years. The 1999 Incentive Plan may be
amended or terminated  by the Board of Directors,  but no such action may impair
the rights of a participant under a previously granted option.

     The 1999  Incentive Plan provides the Committee the discretion to determine
when options granted  thereunder shall become exercisable and the vesting period
of such options. Upon termination of a participant's  employment or relationship
with the Company, options may be exercised only to the extent exercisable on the
date of such  termination  (within three  months),  but not  thereafter,  unless
termination  is due to  death or  disability,  in which  case  the  options  are
exercisable within one year of termination.

     The 1999 Incentive Plan provides the Committee  discretion to grant SARs to
key employees,  consultants and directors.  Promptly after exercise of a SAR the
holder  shall be entitled  to receive in chase,  by check or in shares of Common
Stock,  an amount  equal to the

                                       11
<PAGE>

excess of the fair  market  value on the  exercise  date of the shares of Common
Stock as to which the SAR is exercised over the base price of such shares, which
shall be determined by the Committee

     The 1999 Incentive Plan also provides the Committee  discretion to grant to
key persons  shares of  restricted  stock subject to certain  contingencies  and
restrictions as the Committee may determine.

     As of December  31, 1999 a total of  4,761,311  options had been issued and
were outstanding  pursuant to the Company's stock incentive  plans.  Each of the
outstanding  options  has an  exercise  price at least  equal to the fair market
value of the Common Stock on the date of grant.  As of December 31, 1999,  there
were no SARs  outstanding  and there has been one grant of  Restricted  Stock of
10,000 shares of Common Stock to a former officer of the Company.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.

PRINCIPAL STOCKHOLDERS

     The following table sets forth, as of April 19, 2000,  certain  information
regarding the ownership of voting  securities of the Company by each stockholder
known to the  management of the Company to be (i) the  beneficial  owner of more
than 5% of the Company's  outstanding  Common  Stock,  (ii) the directors of the
Company during the last fiscal year,  (iii) the executive  officers named in the
Summary  Compensation  Table herein under "Executive  Compensation" and (iv) all
executive  officers and  directors  as a group.  The Company  believes  that the
beneficial  owners  of the  Common  Stock  listed  below,  based on  information
furnished by such owners,  have sole investment and voting power with respect to
such shares.

<TABLE>
<CAPTION>
                                                     AMOUNT OF SHARES               PERCENTAGE
         NAME                                       BENEFICIALLY OWNED                 OWNED
         ----                                       ------------------                 -----
<S>                                                     <C>                <C>        <C>

         GEORGE ALLEN, ESQ.                               60,300           (4)          *
         12701 Fair Lakes Circle, Suite 550
         Fairfax, Virginia 22033

         EUGENE J. AMOBI                                 430,000           (5)        1.15%
         12701 Fair Lakes Circle, Suite 550
         Fairfax, Virginia 22033

         MAARTEN R. HEYBROEK                              1,500            (2)          *
         12701 Fair Lakes Circle, Suite 550
         Fairfax, Virginia 22033

         KEITH P. HICKS, ESQ.                            399,597           (11)       1.07%
         4121 Roberts Road
         Fairfax, Virginia 22032

         JOHN F. MOYNAHAN                                111,680           (9)          *
         12701 Fair Lakes Circle, Suite 550
         Fairfax, Virginia 22033

         EDWARD G. NEWMAN                               3,089,911          (1)        8.22%
         12701 Fair Lakes Circle, Suite 550
         Fairfax, Virginia 22033

         STEVEN A. NEWMAN, M.D.                         1,841,064          (6)        4.88%
         12701 Fair Lakes Circle, Suite 550
         Fairfax, Virginia 22033
</TABLE>

                                       12
<PAGE>

<TABLE>
<CAPTION>

<S>                                                      <C>               <C>
         PHILLIP E. PEARCE                               130,000           (5)          *
         12701 Fair Lakes Circle, Suite 550
         Fairfax, Virginia 22033

         JAMES J. RALABATE, ESQ                          168,726           (7)          *
         5792 Main Street
         Williamsville, New York 14221

         HUSSEIN SALLAM                                   43,484           (13)         *
         12701 Fair Lakes Circle, Suite 550
         Fairfax, Virginia 22033

         LT. GEN. HARRY E. SOYSTER (RET.)                149,364           (5)          *
         12701 Fair Lakes Circle, Suite 550
         Fairfax, Virginia 22033

         WILLIAM TAUSKEY                                    0                           *
         12701 Fair Lakes Circle, Suite 550
         Fairfax, Virginia 22033

         KAZUYUKI TOYOSATO                                70,000           (3)          *
         Urban Square Yokohama Bldg. 10F 1-1
         Sakae-cho Yokohoma-shi Kanagawa
         221-0052 Japan

         DR. EDWIN VOGT                                   98,333           (8)          *
         12701 Fair Lakes Circle, Suite 550
         Fairfax, Virginia 22033

         MARTIN ERIC WEISBERG, ESQ.                      105,000           (12)         *
         405 Lexington Avenue
         New York, New York 10174

         Officers and directors as a group (15          6,698,959          (10)      17.11%
         persons)
</TABLE>

----------

 *  Less than 1%

(1)  Includes  (a) 413,888  shares of Common  Stock  issuable  upon  exercise of
     currently   exercisable   options,  (b)  200,000  shares  of  Common  Stock
     beneficially  owned by an irrevocable  trust  established by Mr. Newman for
     the benefit of his children , (c) 500,000 shares  registered under the name
     of Bear Stearns pursuant to a pledge agreement  between Mr. Newman and Bear
     Stearns and (d) 9,000 shares owned by an irrevocable  trust  established by
     Dr. Steven A. Newman for which Mr. Newman is trustee.  Does not include (a)
     776,950  shares of Common Stock  beneficially  owned by Mr.  Newman's wife,
     Francis C. Newman;  (b) 28,900 shares of Common Stock beneficially owned by
     an  irrevocable  trust  established  by Mr.  Newman for the  benefit of his
     sister;  and (c) 28,900  shares of Common  Stock  beneficially  owned by an
     irrevocable  trust established by Mr. Newman for the benefit of his mother.
     Mr. Newman disclaims beneficial ownership of all such shares.

(2)  Includes 1,500 shares of Common Stock  beneficially owned by Mr. Heybroek's
     children. Mr. Heybroek resigned from his position with the Company on June
     15, 1999.

                                       13
<PAGE>

(3)  Includes  70,000 shares of Common Stock issuable upon exercise of currently
     exercisable options.

(4)  Includes  60,000 shares of Common Stock issuable upon exercise of currently
     exercisable options.

(5)  Includes 130,000 shares of Common Stock issuable upon exercise of currently
     exercisable options.

(6)  Includes  (a) 540,583  shares of Common  Stock  issuable  upon  exercise of
     currently   exercisable   options,  (b)  100,000  shares  of  Common  Stock
     beneficially  owned by an irrevocable  trust  established by Dr. Newman for
     the  benefit  of his  children,  for  which  shares  Dr.  Newman  disclaims
     beneficial ownership,  (c) 500,000 shares registered under the name of Bear
     Stearns pursuant to a pledge agreement  between Dr. Newman and Bear Stearns
     and (d) 32,000 shares owned by an irrevocable  trust  established by Edward
     G. Newman for which Dr. Newman is trustee.

(7)  Includes  (a) 110,000  shares of Common  Stock  issuable  upon  exercise of
     currently exercisable options and (b) 30,000 shares issued upon exercise of
     options and currently held by Mr. Ralabate.

(8)  Includes  78,333 shares of Common Stock issuable upon exercise of currently
     exercisable  options.

(9)  Includes  60,580 shares of Common Stock issuable upon exercise of currently
     exercisable  options  and  50,000  shares of  Common  Stock  issuable  upon
     exercise of options exercisable within 60 days of April 19, 2000.

(10) Includes  1,951,868  shares  of Common  Stock  issuable  to the group  upon
     exercise of currently exercisable options and 50,000 shares of Common Stock
     issuable upon exercise of options  exercisable  within 60 days of April 19,
     2000.

(11) Includes  80,000 shares of Common Stock issuable upon exercise of currently
     exercisable options.

(12) Includes 105,000 shares of Common Stock issuable upon exercise of currently
     exercisable options.

(13) Includes  43,484  shares of Common Stock issued to Mr. Sallam upon exercise
     of options.  Mr. Sallam was hired as an employee of the Company in December
     1997 and resigned from his position with the Company in December 1999.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     In connection with transactions described below, the Company did not secure
an  independent  determination  of  the  fairness  and  reasonableness  of  such
transactions and arrangements  with affiliates of the Company.  In each instance
described below, the disinterested directors (either at or following the time of
the transaction)  reviewed and approved the fairness and  reasonableness  of the
terms of the  transaction.  The Company  believes that each transaction was fair
and  reasonable  to the Company and on terms at least as favorable as could have
been obtained from non-affiliates.  Transactions between any corporation and its
officers and directors are subject to inherent conflicts of interest.

TECH INTERNATIONAL AND TECH VIRGINIA

     Since  December  1992,   the  Company  has  maintained   various   business
relationships with Tech  International and since 1994, with Tech Virginia.  Tech
International  operates a  computer  software  and  consulting  business.  Until
December 30, 1994,  Tech  International's  Virginia  operations  were  conducted
through its Virginia  business  unit. In December 30, 1994,  Tech  International
spun-off the Virginia business unit (the "Spin-Off") as Tech Virginia. Edward G.
Newman, a principal stockholder,  director and the Chairman, President and Chief
Executive  Officer of the Company,  Steven A. Newman, an Execuive Vice President
and Vice  Chairman of the Board of Directors of the Company and Eugene J. Amobi,
a director of the Company,  were the stockholders,  and continue as officers and
directors of Tech Virginia. Eugene J. Amobi is the sole director and stockholder
of Tech International

MANAGEMENT PERSONNEL AGREEMENTS WITH TECH VIRGINIA

     Messrs.  Edward G.  Newman,  Steven A.  Newman  and  Eugene  Amobi each had
employment  agreements  with Tech Virginia under which each of them was entitled
to a salary and each was eligible to receive  certain  bonuses.  The  agreements
with  Messrs.  Edward G.  Newman and Steven A. Newman  required  each of them to
devote only  reasonable  time and  attention to Tech  Virginia,  provided  their
activities  for Tech Virginia did not interfere  with their  obligations  to the
Company.  Upon the acquisition of Tech Virginia by the

                                       14
<PAGE>

Company,  such  employment  agreements were terminated by agreement with Messrs.
Newman,  Newman, and Amobi. Messrs.  Newman,  Newman and Amobi have continued to
provide  services to Tech Virginia since the  acquisition  without  contract but
under similar terms and conditions as their terminated agreements.

LEGAL SERVICES

     The Company incurred  $239,598 in fees and disbursements for legal services
rendered to the Company for the year ended  December 31, 1999,  payable to James
J.  Ralabate,  Esq. In addition,  Mr.  Ralabate  served as processing  agent for
payments  of $224,377 to  domestic  and  international  law firm during the year
ended  December  31,  1999 for fees  and  expenses  related  to the  filing  and
maintenance of the Company's patents and trademarks.

     The Company incurred  $663,075 in fees and disbursements for legal services
rendered to the Company for the year ended December 31, 1999,  payable to Parker
Chapin LLP, the law firm where Martin Eric Weisberg, Esq. is a partner.

     The Company incurred  $218,687 in fees and disbursements for legal services
rendered to the Company for the year ended December 31, 1999, payable to McGuire
Woods  Battle & Boothe,  LLP,  the law firm in which  George  Allen,  Esq.  is a
partner.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.


EXHIBIT              DESCRIPTION
-------              -----------

23.1                 Consent of Grant Thornton LLP


                                       15
<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                             XYBERNAUT CORPORATION


                             By: /s/ Edward G. Newman
                                -----------------------------
                                     Name:  Edward G. Newman
                                     Title: Chairman of the Board, President and
                                              Chief Executive Officer

Dated:   April 21, 2000

                               POWER OF ATTORNEY

     KNOW  ALL MEN BY THESE  PRESENTS,  that  each  individual  whose  signature
appears  below  constitutes  Edward G. Newman and Steven A. Newman,  each acting
alone,  his true and  lawful  attorney-in-fact  and  agent,  with full  power of
substitution  and  resubstitution,  for him and in his name, place and stead, in
any and all  capacities,  to sign any and all amendments to this Form 10-KSB and
to file  the  same  with  exhibits  thereto,  and all  documents  in  connection
therewith,  with the  Securities  and Exchange  Commission,  granting  unto said
attorneys-in-fact  and agents,  and each of them, full power and authority to do
and perform each and every act and thing  requisite  and necessary to be done in
and about the  premises,  as fully to all  intents  and  purposes as he might or
could  do  in  person,   hereby   ratifying   and   confirming   all  that  said
attorneys-in-fact  and  agents  or any of them,  or their or his  substitute  or
substitutes, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the  requirements  of the Securities  Act of 1934,  this annual
report on Form  10-KSB has been  signed  below by the  following  persons in the
capacities and on the date indicated.

     In accordance  with the  Securities  Exchange Act of 1934,  this report has
been  signed  below by the  following  persons on behalf of the  Company and the
capacities and on the dates indicated.
<TABLE>
<CAPTION>

       Signature                                     Title                             Date
<S>                                                                                                  <C>
  /s/ EDWARD G. NEWMAN                      President, Chief Executive             April  21, 2000
  -------------------------------            Officer and Chairman of
  Edward G. Newman                           the Board of Directors

  /s/ WILLIAM H. TAUSKEY                    Executive Vice President               April  21, 2000
  -------------------------------
  William H. Tauskey

  /s/ JOHN F. MOYNAHAN                      Senior Vice President,                 April  21, 2000
  -------------------------------            Chief Financial Officer and
  John F. Moynahan                           Treasurer

  /s/ EDWIN VOGT                            Senior Vice President and              April  21, 2000
  -------------------------------            Director
  Edwin Vogt

  /s/ STEVEN A. NEWMAN                      Executive Vice President               April  21, 2000
  -------------------------------            and Vice Chairman of the
  Steven A. Newman                           Board of Directors

  /s/ KAZUYUKI TOYOSATO                     Executive Vice President               April  21, 2000
  -------------------------------            and Director
  Kazuyuki Toyosato

  /s/ MARTIN ERIC WEISBERG                  Secretary and Director                 April  21, 2000
  -------------------------------
  Martin Eric Weisberg

  /s/ GEORGE ALLEN, ESQ.                    Director                               April  21, 2000
  -------------------------------
  George Allen

  /s/ EUGENE J. AMOBI                       Director                               April  21, 2000
  -------------------------------
  Eugene J. Amobi
</TABLE>

                                       16
<PAGE>
<TABLE>
<CAPTION>

<S>                                       <C>                                     <C>
  /s/ KEITH P. HICKS                        Director                               April  21, 2000
  -------------------------------
  Keith P. Hicks

  /s/ PHILLIP E. PEARCE                     Director                               April  21, 2000
  -------------------------------
  Phillip E. Pearce

  /s/ JAMES J. RALABATE                     Director                               April  21, 2000
  -------------------------------
  James J. Ralabate

  /s/ LT. GEN. HARRY E. SOYSTER             Director                               April  21, 2000
  -------------------------------
  Lt. Gen. Harry E. Soyster

</TABLE>

                                       17