A Pay By Touch supplier's tale of woe

Michael Barnes, the president of NorhTec, a computer hardware maker, says he's been royally stiffed by Pay By Touch, the troubled biometrics company now under court supervision. Stiffed to the tune of $3 million in promised orders, including more than half a million dollars in unpaid shipments. Former Pay By Touch CEO John Rogers left behind not just 750 angry employees with jobs on the line, and investors whose $300 million in funding looks unlikely to return much. To that list of aggrieved parties add suppliers like Barnes, who filled orders for the failing company but say they haven't been paid. Perversely, Barnes is rooting for the company to make a comeback, if only so he'll have a chance of getting what he's owed. Here's Barnes's story:

We are a supplier to Pay By Touch or were a supplier. When we first met them, they were quite concerned that as a small company, we would be able to scale to meet their demands. Originally, we told them that we could do anything so long as there was enough money available.

We were told no problem. We were told that big money was behind PBT and that the Getty Foundation among others were behind Pay By Touch. Initially, we were told that we would get money in advance. Then we were told COD [cash on delivery]. After that 10 days and finally net 30.

Our first orders seemed way beyond what we could manage and finance but Pay By Touch told us that if we wanted to play in the big leagues, we had to step up to the plate. Somehow, we scraped up enough money for the first order. This was the biggest order we had ever handled but we pulled it off. Instead of 30 days, it took about 50 days to get paid.

It was a long 50 days too. Orders continued to come in. We shipped and each payment period took longer. After getting a P.O. for about $800,000.00 we were told that there was a hold on the software and we had to wait to ship until they updated their software. We wound up holding inventory for seven months until they resolved their software issues.

During this time, we didn't get paid for the units we had already shipped. Our cash was all tied up. Finally, PBT resolved their issued and asked us to urgently ship. They told us they needed us to ship as fast as possible and they ordered another $560,000 worth of product. They told us that we could expect another $2.5 million in orders through the rest of 2007.

Once again, we were pushed to ship. After shipping the last shipment, we got news there would be a delay in paying us. This was unbelievably bad news as $560,000 was a huge amount of money to have tied up so long.

We were told that there was no real danger. There were investors standing by to invest and it was just a delay. After a few weeks, we were told that we would be getting payments and they would let us know when the transfers were made. Each time we checked, no transfers were made. Over and over, we were told we would get payments. We never received any money.

Our company is a small company. We are quite different than PBT. When we had to travel together, we went coach and they went business class. We stayed at different hotels. I was once showed a business card and told it cost $7.00. The person showing it to me explained that this was required for image. I showed them my business card which I printed with an Epson printer.

When we first started working with Pay By Touch, we had visions of over 100,000 of our systems in the field. While we were quite grateful to get orders for thousands of machines, it was clear that there was no way a few thousand systems could generate the revenue needed to justify the expenditures.

I certainly hope that something happens that will allow Pay By Touch to operate and pay down their debts. This period has been one of the most stressful in my life. It is even worse than watching my Sun stock drop from its highs. Needless to say, I hope for a miracle and that Pay By Touch is able to come back.