<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT 1934
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT 1934
For the quarter ended September 30, 1997
Commission file number: 0-8951
COMPARATOR SYSTEMS CORPORATION
(Exact name of small business issuer as specified
in its business charter)
Colorado 95-3151060
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4667 MacArthur Blvd., Suite 400, Newport Beach, CA 92660
(Address of principal executive offices) (Zip code)
(714) 851-4300
(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such
reports), and (2) has been subject to the filing requirements for
at least the past 90 days. /X/ YES / / NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant filed all documents
and reports required to be filed by Section 12, 13, or 15(d) of
the Exchange Act after the distribution of securities under a
plan confirmed by court. / / YES / / NO
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
September 30, 1997.
The number of shares of Registrant's common stock outstanding as
of September 30, 1997, was 614,234,838.
<PAGE>
CONTENTS
Page
Number
PART I Financial Information
Item 1: Financial Statements:
Unaudited Balance Sheets as of September 30,
1997 and Fiscal Year Ended June 30, 1997 3
Unaudited Statement of Income for Three
Months Ending September 30, 1997 and 1996 4
Unaudited Statement of Cash Flows for the
Three Months Ending September 30, 1997
and 1996 5
Notes to Unaudited Financial Statements 6
Item 2: Management's Discussion and Analysis or
Plan of Operation 7
PART II Other Information
Item 1: Legal Proceedings
Incorporated by reference to the Company's
Annual Report on Form 10-KSB for the year
ended June 30, 1997.
A judgment case number 783608, Michael Blewett
vs. Comparator Systems Corporation, was entered
on 8/28/97 for the amount of $71,885.11 in the
Orange County Superior Court.
Item 2: Changes in Securities
Not applicable
Item 3: Defaults upon Senior Securities
Not applicable
Item 4: Submission of Matters to a Vote of the
Security Holders
Not applicable
Item 5: Other Information
Not applicable
Item 6: Exhibits and Reports on Form 8-K
a. Exhibit 27
Financial Data Schedule
b. Reports on Form 8-K
None
SIGNATURES 8
2
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<TABLE>
COMPARATOR SYSTEMS CORPORATION
PART 1. FINANCIAL INFORMATION
UNAUDITED BALANCE SHEETS
Item 1. Financial Statements
<CAPTION>
Three Months Fiscal Year
ended ended
September 30, 1997 June 30, 1997
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,662 $ 2,523
Other receivables 14,744 14,744
Total Current Assets 17,406 17,267
PROPERTY AND EQUIPMENT
Machinery and equipment 139,551 139,551
Furniture and fixtures 60,117 60,117
Tooling and molds 74,998 74,998
Total property and equipment 274,666 274,666
Less accumulated depreciation (255,916) (254,666)
Property and equipment, net 18,750 20,000
TOTAL ASSETS $ 36,156 $ 37,267
LIABILITIES & SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Judgments and claims $ 366,922 $ 295,036
Notes payable 1,250,962 1,181,962
Accrued salaries and taxes 1,367,118 1,363,568
Accrued expenses 636,370 634,651
Accrued interest 604,302 577,114
Accrued expenses due to officers 13,500 35,800
Total Current Liabilities 4,239,174 4,088,131
SHAREHOLDERS' DEFICIT:
Preferred Stock - par value $5.00
per share, 50,000,000 shares
authorized, none issued
Common Stock - par value $0.01 per
share, 750,000,000 shares author-
ized, 614,234,838 shares issued
and outstanding at September 30,
1997 and June 30, 1997 6,142,350 6,142,350
Additional paid-in capital 18,680,277 18,680,277
Retained earnings (deficit) (29,025,645) (28,873,491)
Total Shareholders' Deficit (4,203,018) (4,050,864)
TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIT $ 36,156 $ 37,267
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
<TABLE>
COMPARATOR SYSTEMS CORPORATION
UNAUDITED STATEMENT OF INCOME
<CAPTION>
Three Months Ended September 30, 1997 1996
<S> <C> <C>
REVENUES $ 0 $ 103,205
OPERATING EXPENSES:
General and administrative 91,238 242,528
Marketing 0 61,613
Research and development 0 1,500
Professional fees 31,778 63,692
Total operating expenses 123,016 369,333
LOSS FROM OPERATIONS (123,016) (266,128)
OTHER INCOME (EXPENSE):
Interest expense (29,138) (27,295)
Other income, net 0 0
Total other expenses, net (29,138) (27,295)
LOSS BEFORE PROVISION FOR INCOME
TAXES (152,154) (293,423)
PROVISION FOR INCOME TAXES 0 0
NET LOSS $ (152,154) $ (293,423)
NET LOSS PER SHARE:
Net loss $ (0.0002) $ (0.0005)
Weighted average shares
outstanding 614,234,838 611,609,965
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
<TABLE>
COMPARATOR SYSTEMS CORPORATION
STATEMENTS OF CASH FLOWS
For the Quarter Ended September 30
<CAPTION>
Three Months Ended September 30, 1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (152,154) $ (293,423)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation and amortization 1,250 6,573
Changes in operating assets and
liabilities:
Other receivables 0 2,500
Prepaid expenses and other
assets 0 2,289
Accrued expenses 82,043 144,376
Net cash used by operating
activities (68,861) (137,685)
CASH FLOWS USED BY INVESTING
ACTIVITIES 0 0
CASH FLOWS FROM FINANCING
ACTIVITIES:
Increase in borrowings 69,000 130,436
Net cash provided by financing
activities 69,000 130,436
NET INCREASE (DECREASE) IN CASH 139 (7,249)
CASH, BEGINNING OF YEAR 2,523 42,980
CASH, END OF YEAR $ 2,662 $ 35,731
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid for interest 0 1,394
cash paid for taxes 0 0
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
COMPARATOR SYSTEMS CORPORATION
Notes to Unaudited Financial Statements
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and
Regulation S-B. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month
period ended September 30, 1997 is not necessarily indicative of the
results that may be expected for the year ended June 30, 1998. For further
information, refer to the financial statements and notes thereto included
in the Company's annual report on Form 10-KSB for the year ended June 30,
1997.
The balance sheet at June 30, 1997 has been derived from the audited
financial statements at that date but does not include all of the
information and notes required by generally accepted accounting principles
for complete financial statements.
2. Income Taxes
The Company has not provided for income taxes as, in the opinion of
management, no taxes are due except for minimal amounts applicable to
certain states.
3. Net Loss per Share
Net loss per share is calculated using the weighted average number of
shares issued and outstanding. Common share equivalents and contingent
shares issuable are not considered as their effect is anti-dilutive.
6
<PAGE>
COMPARATOR SYSTEMS CORPORATION
Item 2: Management's Discussion and Analysis of Financial Conditions
Overview
The Company has experienced an increasingly critical shortage of working
capital, with priority for the usage of its very limited funds being given
to legal fees and essential Company survival expenses other than salaries.
Indeed, it does not presently have sufficient cash assets, without the
borrowing of funds from third parties, to pay the costs of legal counsel
retained for needed advice and assistance in compliance with the disclosure
and reporting requirements of the 1934 Act. As a result, the Company's
business operations, at present, are essentially dormant with approximately
$2,500 in funds available for operations as of September 30, 1997. Apart
from the Officers and Directors (who have deferred their salaries), the
Company has no paid employees. The Company is not presently selling any
products nor does it have the components to manufacture or produce
products.
Despite these extremely adverse operational and financial conditions, the
current board of directors believes the Company could continue in business
if it were able to raise additional capital of at least $500,000. This
additional capital, if available, should be sufficient for the
commercialization of the Company's prior technology in conjunction with
existing synergistic, state-of-the-art, mainstream, public domain
technologies. Management feels that the combination of the above will
place the Company in a position to market a biometric identify system
utilizing the Company's technologies and that of others that is card-based
and portable. The management of the Company is aware, however, and
acknowledges herein, that there are presently significant legal issues as
to the ownership rights that the Company may have to the technology in the
Comparator 5000 device. Accordingly, investors are cautioned that even if
the Company were successful in raising additional capital, of which there
can be no assurance, there are significant legal issues relating to
ownership rights in the Comparator 5000 technology that will have to be
resolved in order for the Company to recommence business operations and to
have any opportunity to become financially viable.
7
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
COMPARATOR SYSTEMS CORPORATION
Date: November 14, 1997 By: /s/ John Hinterleitner
-------------------------
John Hinterleitner
Corporate Secretary
Date: November 14, 1997 By: /s/ Thomas C. Hanscome
-------------------------
Thomas C. Hanscome
Chief Executive Officer
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 2,662
<SECURITIES> 0
<RECEIVABLES> 14,744
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,406
<PP&E> 274,666
<DEPRECIATION> 255,916
<TOTAL-ASSETS> 36,156
<CURRENT-LIABILITIES> 4,239,174
<BONDS> 0
0
0
<COMMON> 6,142,350
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 36,156
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 123,016
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,138
<INCOME-PRETAX> (152,154)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (152,154)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
