XYBERNAUT RECEIVES ORDER FOR ATIGO MOBILE COMPUTERS FOR ENTERPRISE OPERATIONS AT TESCO GROCERY STORES IN THE UK

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Xybernaut Corporation (NASDAQ: XYBR) today announced that TESCO, the largest grocery supermarket company in the United Kingdom and the third largest retail company in the world, has completed a contract to purchase and deploy several thousand Xybernaut Atigo mobile/wearable computers -- a contract expected to be valued at more than $9 million (USD).

Revenue associated with this deployment will primarily be recognized in the quarters during which the products are delivered, and Xybernaut has already begun shipping units in the Company's current fiscal year (2004). In addition to the Atigo hardware order, the Xybernaut services team (XSI) has also been engaged to provide integration/build services to TESCO giving them a customized build and installation process.

The initial order for more than 1,300 Atigo units outlines deployment to more than 300 grocery stores within TESCO's Great Britain operations. TESCO grocery employees at these stores use the Xybernaut Atigos to fulfill customer orders placed over TESCO.com, TESCO's web site.

Additional solution services related to this order are expected throughout 2004 and beyond.

"We wanted a product to make our in-store operations better and simpler so we can continue to improve our customer offer," said Mike Yorwerth, Head of Operations and Infrastructure for TESCO.com. "After evaluating several manufacturers, we quickly realized that the Xybernaut Atigo offered us the most flexibility and performance to meet our needs. This versatility was one of the Atigo's key differentiators, added Yorwerth.

Beginning in early 2004, TESCO and Xperience Group -- a member of the Team Xybernaut integrator community -- evaluated a variety of technologies over a several month period to assess return on investment (ROI) and the manner in which computers would best fit into TESCO operations. After evaluating several key factors, the TESCO team chose the Xybernaut Atigo as the technology platform for this online fulfillment program.

TESCO is also evaluating additional Atigo applications in the categories of supply chain, logistics, inventory/stock management, promotional efforts, remote register/cashier services and employee productivity.

Similar to Atigo customers announced in 2003 and earlier this year, TESCO is taking advantage of many of the unique customization options Xybernaut makes available to Atigo customers. For example, TESCO Atigo units will be shipped pre-configured with TESCO client (workstation) and enterprise network applications. Working closely with Xperience Group, a leading Xybernaut distributor and fulfillment partner in the United Kingdom, Xybernaut is configuring and shipping the units customized with predetermined wireless communications capabilities optimized for interoperability with existing and planned TESCO communications systems.

"The order from TESCO is the largest single hardware and solutions purchase in the Company's history, and it represents true exponential growth for us," said Edward G. Newman, chairman and CEO of Xybernaut. "Combined with recent large-scale hardware and solutions contracts in transportation, hospitality, communications, government and military sectors, this TESCO contract adds yet another market segment to the growing list of industries supported in-the-trenches by our Atigo product family and our XSI professionals."

The Atigo product family is available directly from Xybernaut and through the Team Xybernaut community of more than 100 value added resellers (VARs) and systems integrators. Pricing for Atigo hardware depends on the configuration and accessory options chosen by the customer.

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