Comparator Systems Seeks Funds to Stave Off Collapse

NEWPORT BEACH —  Comparator Systems Corp., the controversial company that set stock trading records last year before crashing amid fraud allegations, said in a government filing that it is on the verge of financial collapse and needs to raise money immediately.

In a bleak financial report filed with the Securities and Exchange Commission on Tuesday, the troubled maker of fingerprint scanning devices said its “very survival” hinges on its ability to secure an infusion of money.

The company said finding funding is by no means certain, but that options being considered include “short-term financing and additional loans or sale of equity.”

Reached at the company’s Newport Beach headquarters, officials would not rule out the possibility of issuing new stock, but declined to elaborate. Throughout the company’s history, Comparator has issued millions of shares of stock to pay for everything from employees’ salaries to dental bills.

SEC officials said Comparator is not barred from issuing new shares, even though the SEC alleged in its lawsuit last year that the company had no real products and appeared to exist solely for the purpose of selling stock.

Comparator was at the center of a stock market scandal last May after its stock, which traditionally sold for pennies per share, zoomed to as high as $1.87 per share during three record days of trading on the Nasdaq market. The company’s stock was later removed from the Nasdaq market, and now sells for about a penny per share in informal trading.

The company, which has never reported a profit in its 20 years and rarely had a sale, also said in its filing that it has plans to market a new fingerprint scanning device. But those plans have been disrupted by SEC and shareholder lawsuits, as well as the company’s financial woes.

Comparator was to pay engineers stock and cash for the rights to its new fingerprint identification technology, the filing said. But the company has been unable to meet these obligations, the filing said, and “failure to perform its financial commitments may result in [Comparator] losing control of the technology.”

Further, Comparator “has been unable to proceed with the marketing of its new product line, and most prospective customers have backed away, citing the SEC litigation.”

The statements were part of an annual financial report that was originally due Sept. 30. The company reported a loss of $2.1 million for its fiscal year that ended June 30, compared with a loss of $2.2 million in the prior year.

As part of the company’s settlement with the SEC last year, former Comparator executives including Chief Executive Robert Reed Rogers agreed to resign their positions. But according to Tuesday’s filing, Rogers continues to work as a consultant to the company and is being paid $125 per hour.

His wife, Celeste Sim, is corporate secretary for the company and also controller. Marianne Bedford, who joined the company less than a year ago, is serving as chairwoman. All but four of the company’s employees have left, according to the filing, many because Comparator was unable to pay their salaries.