Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended April 30, 1998 Commission File Number 0-5449
COMARCO, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-2088894
- -------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
22800 Savi Ranch Parkway, Suite 214, Yorba Linda, California 92887
- ------------------------------------------------------------ --------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (714) 282-3832
--------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities 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 such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 31, 1998.
Common Stock,
$.10 Par Value 4,719,710 Shares
-------------- ----------------
<PAGE>
Index to Form 10-Q
Page No.
--------
Part I. Financial Information
Condensed Consolidated Balance Sheets
April 30, 1998 and January 31, 1998 1
Condensed Consolidated Statements of Income
Quarters ended April 30, 1998 and April 30, 1997 2
Condensed Consolidated Statements of Cash Flows
Quarters ended April 30, 1998 and April 30, 1997 3
Notes to Condensed Consolidated Financial Statements 4-6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signature 14
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
COMARCO, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
April 30, 1998 January 31, 1998
ASSETS (Unaudited) *
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,741,000 $ 5,256,000
Short-term investments 3,567,000 2,348,000
Accounts receivable, net 17,189,000 17,815,000
Inventory 4,852,000 5,247,000
Deferred tax asset 1,383,000 1,383,000
Other current assets 841,000 832,000
----------------- ----------------
Total current assets 34,573,000 32,881,000
Long-term investments 1,820,000 2,364,000
Property and equipment, net 2,192,000 2,240,000
Software development costs, net 3,411,000 3,131,000
Intangible assets, net 2,623,000 2,660,000
Other assets 615,000 618,000
----------------- ----------------
TOTAL ASSETS $ 45,234,000 $ 43,894,000
================= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 756,000 $ 493,000
Deferred revenue 1,842,000 1,914,000
Accrued liabilities 9,841,000 9,537,000
----------------- ----------------
Total current liabilities 12,439,000 11,944,000
Deferred income taxes 1,480,000 1,480,000
Stockholders' equity:
Common stock, $.10 par value,
33,750,000 shares authorized, 4,719,210 and
4,718,710 shares outstanding at April 30, 1998 and
January 31, 1998, respectively 472,000 472,000
Capital contributed in excess of par value 3,079,000 3,074,000
Retained earnings 27,764,000 26,924,000
----------------- ----------------
Total stockholders' equity 31,315,000 30,470,000
----------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 45,234,000 $ 43,894,000
================= ================
See accompanying notes to the condensed consolidated financial statements.
*The condensed consolidated balance sheet as of January 31, 1998 has been
summarized from the Company's audited consolidated balance sheet as of that
date.
</TABLE>
<PAGE>
COMARCO, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
Quarter Ended
April 30, 1998 April 30, 1997
-------------- --------------
<S> <C> <C>
Revenues:
Contract revenues $ 14,394,000 $ 13,922,000
Product sales 7,357,000 6,175,000
--------- ---------
21,751,000 20,097,000
---------- ----------
Direct costs:
Contract costs 9,716,000 9,574,000
Cost of product sales 3,543,000 2,265,000
--------- ---------
13,259,000 11,839,000
Indirect costs 7,255,000 6,605,000
--------- ---------
20,514,000 18,444,000
---------- ----------
Operating income 1,237,000 1,653,000
Net interest income 118,000 135,000
------- -------
Income before income taxes 1,355,000 1,788,000
Income taxes 515,000 679,000
------- -------
Net income $ 840,000 $ 1,109,000
================== ==================
Earnings per share
Basic $ .18 $ .23
================== ==================
Diluted $ .17 $ .21
================== ==================
See accompanying notes to the condensed consolidated financial statements.
</TABLE>
<PAGE>
COMARCO, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
Quarter Ended
April 30, 1998 April 30, 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 840,000 $ 1,109,000
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 597,000 533,000
Provision for doubtful accounts receivable 22,000 10,000
Net purchases of trading securities (762,000) (168,000)
Decrease (increase) in accounts receivable 604,000 (2,076,000)
Decrease (increase) in inventory 395,000 (300,000)
Increase in other current assets (9,000) (131,000)
Decrease (increase) in other assets 3,000 (175,000)
Increase in accounts payable 263,000 196,000
Increase (decrease) in deferred revenue (72,000) 46,000
Increase (decrease) in other current liabilities 304,000 (405,000)
----------------- -----------------
Net cash provided (used) by operating activities 2,185,000 (1,361,000)
Cash flows from investing activities:
Purchases of investments - (1,204,000)
Sales of investments 87,000 464,000
Purchases of property and equipment (221,000) (408,000)
Software development costs (571,000) (468,000)
Cost of acquisition of Cubic, net of cash acquired - (1,720,000)
------------------ -----------------
Net cash used in investing activities (705,000) (3,336,000)
Cash flows from financing activities:
Proceeds from issuance of common stock 5,000 97,000
Purchase of common stock - (693,000)
------------------ -----------------
Net cash provided (used) by financing activities 5,000 (596,000)
----------------- -----------------
Net increase (decrease) in cash and cash equivalents $ 1,485,000 $ (5,293,000)
================= =================
Supplemental disclosures of cash flow information:
Cash paid during the quarter for:
Interest $ - $ -
Income taxes 39,000 10,000
See accompanying notes to the condensed consolidated financial statements.
</TABLE>
<PAGE>
COMARCO, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
April 30, 1998 and April 30,1997
(Unaudited)
1. General
The financial statements have been prepared without audit. However, they
reflect all adjustments which in the opinion of management are necessary
to fairly state the Company's financial position at April 30, 1998 and
January 31, 1998 and the results of its operations and cash flows for the
quarters ended April 30, 1998 and April 30, 1997. The information has
been prepared in accordance with Form 10-Q instructions, but does not
necessarily include all information and footnotes required by generally
accepted accounting principles for complete financial statements. The
results of the quarter ended April 30, 1998 are not necessarily
indicative of the results to be obtained for the full fiscal year.
2. Significant Accounting Policies - Per Share Information
During the year ended January 31, 1998, the Company adopted Statement of
Financial Accounting Standards No. 128, Earnings per Share, and computed
basic and diluted net income per share based on the weighted average
number of shares of common stock and potential common stock outstanding
during the period. Potential common stock, for purposes of determining
diluted earnings per share, includes the effects of dilutive stock
options. The effect of such potential common stock is computed using the
treasury stock method. Comparative earnings per share data have been
restated for prior periods. Consolidated net income of the Company used
for diluted earnings per share purposes is diluted as a result of stock
options issued by the Company's subsidiaries which enable their holders
to obtain the subsidiaries' common stock. Basic and diluted net income
per share are calculated as follows:
<TABLE>
Quarter Ended
April 30, 1998 April 30, 1997
-------------- --------------
<S> <C> <C>
Basic:
Net income $ 840,000 $ 1,109,000
Weighted average shares outstanding 4,719,000 4,786,000
--------- ---------
Basic income per common share $ .18 $ .23
========= =========
Diluted:
Net income $ 840,000 $ 1,109,000
Less - net income allocated to subsidiary
dilutive stock options outstanding (22,000) (62,000)
--------- ---------
Net income used in calculation of diluted
income per share $ 818,000 $ 1,047,000
============ =============
Weighted average shares outstanding 4,719,000 4,786,000
Plus - common equivalent shares (determined
using the "treasury stock" method representing
shares issuable upon exercise of stock options 206,000 307,000
------- -------
Weighted average number of shares used in
calculation of diluted income per common
share 4,925,000 5,093,000
========= =========
Diluted income per common share $ .17 $ .21
============ =============
</TABLE>
3. Business Segment Information
The Company's operations have been classified into two business areas:
wireless communications products and outsourced staffing services. The
wireless communications products area develops, produces, and markets a
variety of products and services used in the wireless communications
industry. The outsourced staffing services area provides services to
Federal and local government and commercial customers pursuant to
established contracts. Corporate and other consists primarily of cash and
cash equivalents, fixed assets, and other assets.
Summarized financial information by business segment for the first
quarter of Fiscal Year 1999 is as follows:
<TABLE>
Wireless Outsourced Staffing
Communications Services and Other Corporate
Products Revenues and Other Total
-------- -------- --------- -----
<S> <C> <C> <C> <C>
Revenues 7,311 14,440 - 21,751
Income before income taxes 650 607 98 1,355
Identifiable assets 17,146 11,282 6,806 45,234
</TABLE>
Summarized financial information by business segment for the first
quarter of Fiscal Year 1998 is as follows:
<TABLE>
Wireless Outsourced Staffing
Communications Services and Other Corporate
Products Revenues and Other Total
-------- -------- --------- -----
<S> <C> <C> <C> <C>
Revenues 6,018 14,079 - 20,097
Income before income taxes 1,129 580 79 1,788
Identifiable assets 13,822 8,962 16,776 39,560
</TABLE>
4. Reclassifications
Certain reclassifications of prior year amounts have been made to conform
to the current year presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Except for the historical information contained herein, the
matters discussed in this Form 10-Q are forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act
of 1934, as amended, and Section 27A of the Securities Act of
1933, as amended, that involve risks and uncertainties. The actual
results that the Company achieves may differ materially from any
forward-looking projections due to such risks and uncertainties.
Words such as "believes," "anticipates," "expects," "future,"
"intends," and similar expressions are intended to identify
forward-looking statements but are not the exclusive means of
identifying such statements. A more complete discussion of
business risks is included in the Company's Annual Report on Form
10-K for the year ended January 31, 1998.
(a) Results of Operations
During the first quarter of Fiscal Year 1999 (year ending January
31, 1999), the Company recorded total revenues of $21.8 million,
up 8.5% from the revenues of $20.1 million for the comparable
period of a year earlier. Increased year-to-year revenues are
primarily due to:
o sales of the Company's wireless communications products;
o increase in engineering services activity of 16% year-to-year;
partially offset by:
o reduced activity on the Company's contract at the Los Angeles
County Airports.
Total direct costs of $13.3 million for the first quarter of
Fiscal Year 1999 are up $1.5 million, or 12.7%, from $11.8 million
for the first quarter of Fiscal Year 1998. The increase relates to
the increased revenue activity, particularly from the Company's
wireles communications products business (as discussed below in
wireless communications products section).
Total indirect costs of $7.3 million for the first quarter of
Fiscal Year 1999 are up $.7 million, or 10.6%, from $6.6 million
for the first quarter of Fiscal Year 1998. The increase is
principally from the Company's wireless communications products
business, and results from increased product development costs and
increased selling, general and administrative costs.
Net interest income (interest income less interest expense) for
the first quarter of Fiscal Year 1999 amounted to $118,000, as
compared to $135,000 for the comparable period of the prior fiscal
year. The decrease is principally due to a reduction in cash
available to invest from an average of $14 million in the first
quarter of Fiscal Year 1998 to an average of $11 million in the
first quarter of Fiscal Year 1999.
The Company's effective tax rate for the first quarter of Fiscal
Year 1998 is 38%, the same as the comparable period of the prior
fiscal year.
Net income of $.8 million for the first quarter of Fiscal Year
1999 is down from $1.1 million for the comparable period of the
prior year due to the increased product development and selling,
general and administrative costs incurred for the wireless
communications products business.
Wireless Communications Products
Wireless communications products revenues increased 21.7% to $7.3
million for the first quarter of Fiscal Year 1999 from $6.0
million for the comparable period of the prior fiscal year. This
increase is due to increased sales of the Company's emergency
callbox systems. Summary operating results for Comarco Wireless
Technologies, Inc., the Company's wireless communications products
subsidiary, are as follows:
<TABLE>
Quarter Ended Quarter Ended
April 30, 1998 April 30, 1997
-------------- --------------
<S> <C> <C>
Revenues $7,311,000 $6,018,000
Cost of product sales 3,496,000 2,189,000
--------- ---------
Gross income 3,815,000 3,829,000
Gross income percentage 52.2% 63.6%
Indirect costs* 3,165,000 2,700,000
--------- ---------
Operating income $ 650,000 $1,129,000
======== ==========
</TABLE>
*Indirect costs include selling, general, and administrative
expenses as well as sustaining engineering and research and
development expenses.
The decreased gross income percentage is due to greater sales of
the Company's emergency callbox systems, which have lower gross
margins than the field measurement and revenue assurance product
families. The Company's current projections indicate that product
sales other than emergency callbox systems may not increase
significantly over prior periods for the first half of Fiscal Year
1999, while comparisons for the second half of Fiscal Year 1999
are expected to be more favorable due to anticipated upgraded
product offerings, although there can be no assurances in this
regard.
The increase in indirect costs of $.5 million for the first
quarter of Fiscal Year 1999 over the comparable period of the
prior fiscal year is principally a result of increased costs
incurred in the Company's product development program, as well as
increased selling, general and administrative costs. Sustaining
engineering and research and development expenses increased $.3
million to $1.2 million from the first quarter of Fiscal Year 1998
to the first quarter of Fiscal Year 1999, while selling, general
and administrative expenses increased $.2 million to $2.0 million
from the first quarter of Fiscal Year 1998 to the first quarter of
Fiscal Year 1999.
Operating income as a percentage of revenues is 8.9% for the first
quarter of Fiscal Year 1998, compared to 18.8% for the comparable
period of the prior fiscal year. This decrease is primarily due to
the lower gross income due to a larger mix of the lower margin
emergency callbox systems than in the prior year first quarter, as
discussed above.
The Company is continuing its product development program in its
wireless communications products business. In accordance with
Financial Accounting Standard No. 86, Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed, the
Company capitalized $571,000 and $468,000, respectively, during
the first quarters of Fiscal Years 1999 and 1998, respectively.
Corresponding amounts amortized were $291,000 and $250,000,
respectively.
In May 1998, the Company completed the purchase of intellectual
property and related software assets from Industrial Technology,
Inc. The acquired technology includes software suited for
automating the comparison of digital speech quality over diverse
cellular, PCS, and other wireless networks. The Company intends to
use the acquired technology to enhance its network evaluation
family of products.
The Company's future product prospects will depend in part on its
ability to enhance the functionality of its existing products in a
timely and cost-effective manner and to identify, develop, and
achieve market acceptance of new products. There can be no
assurance that the Company will be able to respond to
technological advances, changes in customer requirements, or
changes in regulatory requirements or industry standards, and any
significant delays in development, introduction or shipment of
products, or achievement of acceptable product costs, could have a
material adverse effect on the Company's business, operating
results and financial condition.
The Company's orders for wireless communications products totalled
$5.2 million for the first quarter of Fiscal Year 1999, down from
$6.1 million from the comparable prior period. For the
twelve-month periods ended April 30, 1998 and 1997, orders
received were $26.6 million and $38.9 million, respectively.
Included in the amount for the twelve months ended April 30, 1997
is $10 million of long-term maintenance service business
associated with the purchase of the GTE callbox product line.
Because of the long sales cycle involved in selling these products
and the high unit sales price, the Company believes that orders
are best analyzed by looking at a twelve month time period, as
orders can fluctuate significantly from quarter to quarter. The
value of unfilled orders at April 30, 1998 totalled $15.6 million,
of which $8.4 million relates to long-term maintenance contracts,
and $3.8 million relates to the Company's contract to upgrade the
Los Angeles County callbox system to comply with the Americans
with Disabilities Act's requirements for use by hearing and speech
impaired individuals. The Company currently expects the majority
of the Los Angeles County contract to be performed at the end of
Fiscal Year 1999 and into Fiscal Year 2000. An additional $1.8
million of deferred revenue has been recorded for anticipated
customer warranty obligations.
The Company has experienced fluctuations in wireless
communications products activity in each of the past four years,
with greater sales in the second half of its fiscal year and
lesser amounts in the first half, although this trend has been
declining over the same four years. This trend may or may not
continue as the Company broadens its product offerings. The nature
of the wireless communications products business is inherently
unpredictable; sales and profits may fluctuate significantly from
quarter to quarter; and therefore, period-to-period comparisons of
its operating results are not necessarily meaningful and such
comparisons cannot be relied upon as indicators of future
performance.
The Company faces additional risk factors in developing its
wireless communications products business, including: foreign
marketing, capital requirements, technical requirements,
employees, competition, and proprietary information. A negative
impact to any of these risk factors could have a material adverse
effect on the Company's business, operating results, and financial
condition. Foreign marketing risks include: the need for export
licenses; tariffs and other potential trade restrictions; changes
in laws governing the imposition of duties, quotas, taxes, or
other charges relating to the import or export of its products;
and changes in foreign currency exchange rates which can impact
customers' demand for the Company's products and their ability to
pay for the Company's products. Other companies having a presence
or doing business overseas may have advantages over the Company in
these areas. Certain components used by the Company in its
existing products are only available from single or a limited
number of suppliers, and the inability by any of these suppliers
to fulfill Company requirements may result in an interruption in
production. Access to technical design of air interface devices is
essential for the Company to anticipate and develop compatible
wireless communications products, therefore, the inability to
obtain such technical designs on a timely basis would have a
direct impact on product design and schedule. The Company's future
success also depends in large part on the continued service of its
key personnel, and on its ability to continue to attract and
retain qualified employees, especially highly skilled engineers,
for whom competition in the industry is intense. In addition, the
ability of the Company to compete successfully depends upon a
number of factors, including the rate at which customers accept
the Company's products in overseas markets, product quality and
performance, experienced sales and marketing personnel, rapid
development of new products and features, evolving industry
standards, and the number and nature of the Company's competitors.
There can be no assurance that the Company will be able to compete
successfully in the future. The Company relies on a combination of
trade secrets, copyrights, and contractual rights to protect its
intellectual property. There can be no assurance that the steps
taken by the Company will be adequate to protect its technology;
in addition, the laws of certain foreign countries in which the
Company's products may be sold do not protect the Company's
intellectual property rights to the same extent as do the laws of
the United States.
Outsourced Staffing Services and Other Revenue
Revenues provided by the Company's outsourced staffing services
business area increased 2.1%, from $14.1 million in the first
quarter of Fiscal Year 1998 to $14.4 million in the first quarter
of Fiscal Year 1999. Revenues in this business area decreased from
70.1% of the Company's total revenues in the first quarter of
Fiscal Year 1998 to 66.4% of the Company's total revenues in the
first quarter of Fiscal Year 1999. The increase in
period-to-period revenue is due to an increase in engineering
services activity on contracts with the U.S. Government partially
offset by a decrease in activity on the Company's contract at the
Los Angeles County Airports.
Sales to the U.S. Government as well as to government prime
contractors were 34% and 34% of the Company's total revenue during
the first quarters of Fiscal Years 1998 and 1999, respectively. In
the course of the Company's business, its government contracts are
periodically opened for competition. In March 1998, the Company
announced the award of a contract with an award value of $75
million to continue to provide engineering and management services
to the U.S. Navy at Crane, Indiana. The Company's management
services contract at Reagan Washington National Airport ends on
September 30, 1998. The Company has decided not to pursue the
recompete of this contract. This contract's annual revenues
approximate $8.8 million, it has been marginally profitable, and
it would be unprofitable if reawarded to the Company. Two other
multi-year government contracts are scheduled to end in Fiscal
year 1999 with annual revenues of approximately $3.8 million. The
Company plans to aggressively compete for work opened for
competition to the extent possible and to selectively pursue
certain high value Government procurements. There can be no
assurance that the Company will be selected and awarded the work
associated with any of its future proposals. In addition,
government agencies may terminate their contracts in whole or in
part at their convenience. Government agencies may remove funding
previously provided or may not exercise option periods. Therefore,
there can be no assurance that the Government will fund the
portions of existing contracts that are unfunded, or that the
governmental agencies will exercise any options.
Operating income (revenues less direct costs, indirect costs, and
depreciation and amortization) for outsourced staffing services is
up from $580,000 in the first quarter of Fiscal Year 1998 to
$607,000 in the first quarter of Fiscal Year 1999. The increase is
primarily due to higher revenues for engineering and airport
services, partially offset by lower operating income from
commercial staffing due to the cost of opening additional offices.
(b) Financial Condition
The Company signed a loan agreement with a bank effective
September 26, 1994, which was last amended effective August 15,
1997. The loan agreement consists of (1) an $8 million revolving
credit facility, which expires May 31, 1999, and (2) a $5 million
guidance line of credit, which expired May 31, 1998. The Company
is currently negotiating a restructuring of its credit facilities
and expects the renewed facilities to be in place in approximately
sixty days. The revolving credit facility and the guidance line of
credit are unsecured provided the Company maintains certain
covenants. Currently, management anticipates that cash flow will
remain at a level which will enable the Company to avoid utilizing
the credit facility except to support letters of credit and
acquisition financing, and that the Company will be able to
purchase investments on a regular basis. The Company's cash and
investment balances averaged $11 million (includes highly liquid
long-term investments with maturities of 12 to 36 months) during
the first quarter of Fiscal Year 1999. However, maintaining such
cash balances is predicated on the Company maintaining its
business base and is subject to the cost of financing new
contracts, acquisitions, geographic expansion, product development
costs, and stock re-purchases.
During the first quarter of Fiscal Year 1999, the Company's
average days' sales in accounts receivable decreased, primarily
due to collections of several significant international customer
balances during the quarter.
Several additional key factors indicating the Company's financial
condition include:
<TABLE>
April 30, 1998 January 31, 1998
-------------- ----------------
<S> <C> <C>
Current ratio 2.78 2.75
Working capital $ 22,134,000 $ 20,937,000
Book value per share $6.64 $6.46
</TABLE>
The Company continued to demonstrate solid financial strength in
the above financial factors during the first quarter of Fiscal
Year 1999 due to continued profitable activity.
The Company has a significant commitment for capital expenditures
at April 30, 1998 for Comarco Wireless Technologies, Inc. The
Company has developed and intends to continue to develop new
product line extensions for the wireless communications industry.
This product development program is expected to be funded from the
Company's current working capital. The amounts capitalized and
amortized in the Company's wireless communications products
business in accordance with Financial Accounting Standard No. 86,
Accounting for the Costs of Computer Software to be Sold, Leased,
or Otherwise Marketed, totaled $571,000 and $291,000,
respectively, in the first quarter of Fiscal Year 1999.
The Company's Board of Directors has authorized a stock
re-purchase program of up to 1,500,000 shares. As of April 30,
1998, the Company has re-purchased and retired approximately
929,000 shares. The average price paid per share re-purchased
under the program was $6.55.
The Company is subject to legal proceedings and claims that arise
in the ordinary course of business. In the opinion of management,
the amount of ultimate liability with respect to these actions
will not materially affect the financial condition of the Company.
The Company believes that its cash flow from operations and
available bank borrowings will be sufficient to satisfy the
current and anticipated capital requirements for operations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are included herewith:
ll. Schedule of Computation of Net Income Per Share
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURE
---------
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.
COMARCO, Inc.
-------------
(Registrant)
June 12, 1998
THOMAS P. BAIRD
------------------------
Thomas P. Baird
Chief Financial Officer
(Authorized Officer and Principal Financial Officer)
<TABLE>
Exhibit ll
SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE
Quarter Ended
-----------------------------------------
April 30, 1998 April 30, 1997
-------------- --------------
<S> <C> <C>
BASIC
Net income $ 840,000 $ 1,109,000
Weighted average shares outstanding 4,719,000 4,786,000
------------- --------------
Basic income per common share $ .18 $ .23
============= ==============
DILUTED
Net income $ 840,000 $ 1,109,000
Less - net income allocated to subsidiary
dilutive stock options outstanding (22,000) (62,000)
------------- --------------
Net income used in calculation of diluted
income per share $ 818,000 $ 1,047,000
============= ==============
Weighted average shares outstanding 4,719,000 4,786,000
Plus- common equivalent shares (determined
using the "treasury stock" method)
representing shares issuable upon exercise
of stock options 206,000 307,000
------- -------
Weighted average number of shares used in
calculation of diluted income per common share 4,925,000 5,093,000
============= ==============
Diluted income per common share $ .17 $ .21
============= ==============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-END> APR-30-1998
<CASH> 6,741
<SECURITIES> 5,387
<RECEIVABLES> 17,189
<ALLOWANCES> 0
<INVENTORY> 4,852
<CURRENT-ASSETS> 34,573
<PP&E> 2,192
<DEPRECIATION> 0
<TOTAL-ASSETS> 45,234
<CURRENT-LIABILITIES> 12,439
<BONDS> 0
<COMMON> 472
0
0
<OTHER-SE> 30,843
<TOTAL-LIABILITY-AND-EQUITY> 45,234
<SALES> 7,357
<TOTAL-REVENUES> 21,751
<CGS> 3,639
<TOTAL-COSTS> 20,514
<OTHER-EXPENSES> 7,159
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (118)
<INCOME-PRETAX> 1,355
<INCOME-TAX> 515
<INCOME-CONTINUING> 840
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 840
<EPS-PRIMARY> .18
<EPS-DILUTED> .17
<FN>
NOTE-RECEIVABLES AND PP&E VALUES REPORTED REPRESENT NET AMOUNTS
</FN>
</TABLE>
