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EX-32.1 - EXHIBIT 32.1 - COMARCO INCex32-1.htm
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EX-31.1 - EXHIBIT 31.1 - COMARCO INCex31-1.htm

 



 

UNITED STATES     

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

 

FORM 10-Q

 

 

X

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended

 

July 31, 2017

 

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to ______________

 

Commission file number 0-5449

 

 

COMARCO, INC.

(Exact name of registrant as specified in its charter)

____________________

California

95-2088894

(State or other jurisdiction

(I.R.S. Employer

of incorporation or organization)

Identification No.)

 

28202 Cabot Road, Suite 300, Laguna Niguel, California 92677

(Address of principal executive offices and zip code)

 

(949) 599-7400

(Registrant’s telephone number, including area code)

 

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

  

No

  

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

Yes

  

No

  

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer, accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

  

  

Accelerated filer

  

  

Non-accelerated filer

  

  

Smaller reporting company

 

 

 

 

 

 

 

 

 

Emerging growth company

 

  

 
1

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

  

  

No

 

The registrant had 14,614,165 shares of common stock outstanding as of September 14, 2017.

 

 
2

 

 

COMARCO, INC. AND SUBSIDIARY

 

QUARTERLY REPORT ON FORM 10-Q

FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2017

 

 

TABLE OF CONTENTS

 

 

 

Page

PART I — FINANCIAL INFORMATION

  

  

  

  

  

  

  

ITEM 1.

FINANCIAL STATEMENTS (Unaudited)

  

  

  

  

 

Condensed Consolidated Balance Sheets as of July 31, 2017 and January 31, 2017

4

  

  

  

 

Condensed Consolidated Statements of Operations for the Three and Six Months Ended July 31, 2017 and 2016

5

  

  

  

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 31, 2017 and 2016

6

  

  

  

 

Notes to Condensed Consolidated Financial Statements

7

  

  

  

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

14

  

  

  

ITEM 4.

CONTROLS AND PROCEDURES

19

  

  

  

  

  

  

  

  

  

PART II — OTHER INFORMATION

  

  

  

  

  

  

  

ITEM 1.

LEGAL PROCEEDINGS

22

  

  

  

ITEM 1A.

RISK FACTORS

22

  

  

  

ITEM 6.

EXHIBITS

21

  

  

  

SIGNATURES

22

  

 
3

 

 

PART I — FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

COMARCO, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and par value amounts)

 

   

(Unaudited)

         
   

July 31,

   

January 31,

 
   

2017

   

2017

 

ASSETS

               

Current Assets

               

Cash and cash equivalents

  $ 101     $ 618  

Other current assets

    32       14  

Total current assets

    133       632  

Total assets

  $ 133     $ 632  
                 

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

               

Current Liabilities

               

Accounts payable

  $ 2     $ 6  

Accrued liabilities

    300       384  

Income taxes payable

    -       5  

Total current liabilities

    302       395  

Total liabilities

    302       395  
                 

Commitments and Contingencies (Note 7)

               
                 

Stockholders' Equity:

               

Preferred stock, no par value, 10,000,000 shares authorized; no shares issued or outstanding

    -       -  

Common stock, $0.10 par value, 50,625,000 shares authorized; 14,614,165 shares issued and outstanding at July 31, 2017 and January 31, 2017

    1,461       1,461  

Additional paid-in capital

    18,422       18,410  

Accumulated deficit

    (20,052 )     (19,634 )

Total stockholders' (deficit) equity

    (169 )     237  

Total liabilities and stockholders' (deficit) equity

  $ 133     $ 632  

  

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 
4

 

 

COMARCO, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)

 

   

Three Months Ended

   

Six Months Ended

 
   

July 31,

   

July 31,

 
   

2017

   

2016

   

2017

   

2016

 
                                 

Royalty income

  $ 6     $ -     $ 6     $ -  

Cost of revenue

    -       (472 )     -       (472 )

Gross profit

    6       472       6       472  
                                 

Selling, general and administrative expenses

    202       360       424       724  
      202       360       424       724  

Operating loss

    (196 )     112       (418 )     (252 )

Other income, net

    -       16       -       1,704  
                                 

(Loss) income from operations before income taxes

    (196 )     128       (418 )     1,452  

Income tax expense

    -       -       -       -  

Net (loss) income

  $ (196 )   $ 128     $ (418 )   $ 1,452  
                                 

(Loss) income per basic share:

  $ (0.01 )   $ 0.01     $ (0.03 )   $ 0.10  

(Loss) income per diluted share:

  $ (0.01 )   $ 0.01     $ (0.03 )   $ 0.10  
                                 

Weighted-average shares outstanding basic and diluted:

    14,615       14,644       14,615       14,644  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 
5

 

 

COMARCO, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

   

Six Months Ended

 
   

July 31,

 
   

2017

   

2016

 
                 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net (loss) income

  $ (418 )   $ 1,452  

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

               

Depreciation and amortization

    -       2  

Stock-based compensation expense

    12       18  

Changes in operating assets and liabilities

               

Accounts receivable due from suppliers

    -       122  

Other assets

    (18 )     (22 )

Accounts payable

    (4 )     (756 )

Accrued liabilities

    (84 )     (362 )

Income taxes payable

    (5 )     -  

Net cash (used in) provided by operating activities

    (517 )     454  
                 

Net (decrease) increase in cash and cash equivalents

    (517 )     454  

Cash and cash equivalents, beginning of period

    618       680  

Cash and cash equivalents, end of period

  $ 101     $ 1,134  
                 

Supplementary disclosures of cash flow information:

               

Cash paid for income taxes, net of refunds

  $ 6     $ 40  

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 
6

 

 

COMARCO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

1.

Organization

 

Comarco, Inc. was incorporated in California in 1960 and its common stock has been publicly traded since 1971, when it was spun-off from Genge Industries, Inc. Comarco, Inc.’s wholly-owned subsidiary, Comarco Wireless Technologies, Inc. (“CWT”), was incorporated in the state of Delaware in September 1993. Comarco and CWT are collectively referred to as “we,” “us,” “our,” “Comarco,” or the “Company”.

 

2.

Current Developments, Future Operations, Liquidity and Capital Resources

 

The unaudited consolidated financial statements have been prepared assuming that we will continue to operate as a going concern. As of July 31, 2017, we had negative working capital of $169,000. We have ceased traditional operations and are currently generating no product related revenues. As discussed in Note 8 Subsequent Events, on September 12, 2017, we sold 7,000,000 shares of our Series A Participating Preferred Stock for gross proceeds to us in the amount of $700,000 (“Series A Financing”). We believe the proceeds from our Series A Financing will provide us sufficient capital to allow us to discharge our liabilities and commitments in the normal course of business over the next twelve months. However, our ability to continue to operate as a going concern beyond that period is highly dependent on our ability to successfully resolve our current litigation, monetize our portfolio of patents, generate positive cash flow and/or obtain borrowings or raise additional capital.

  

Our business is currently focused on potentially realizing value from our ongoing or future IP enforcement actions and other litigation as well as further exploring opportunities to expand, protect, and monetize our patent portfolio, including through the potential sale or licensing of some or all our patent portfolio.

  

On February 3, 2015, we filed a lawsuit against Apple, Inc. (“Apple”) for patent infringement. The complaint alleges that Apple products sold in the United States utilizing the Apple Lightning® power supply adapter system, including most iPad®, iPhone®, and iPod® products, infringe the Company’s patented intellectual property. This lawsuit represents our most significant enforcement effort to date, and, together with the Targus and Best Buy lawsuits described elsewhere in this document, demonstrates our ongoing and accelerated efforts to methodically pursue those companies that we believe have infringed on the intellectual property estate that we have developed over the last 20 years. In September of 2015, Apple filed a petition with the Patent Trial and Appeal Board (the “PTAB”) of the United States Patent and Trademark Office requesting Inter Partes Review of our U.S. Patent No. 8,492,933 B2 (the “933 Patent”). On February 22, 2017, the PTAB issued its finding, ruling in Apple’s favor. We believe the PTAB erred in its ruling, and we are appealing the ruling to the Court of Appeals for the Federal Circuit. We estimate that the appeals process will require approximately 12 months to run its course. While we believe that the proceeds from our Series A Financing (see Note 8) should provide us sufficient capital to pursue the appeal for the next 12 months, it is possible that we may require incremental financing to pursue the appeal to conclusion, particularly if the appeals process runs longer than anticipated. If we require additional financing, there can be no assurance that we will be able to obtain requisite financing on acceptable terms, if at all. 

 

On February 13, 2015, we filed a lawsuit against Best Buy for patent infringement under the patent laws of the United States. The complaint alleges that certain Best Buy power charging products sold in the United States under the Rocketfish brand infringe the Company’s patented intellectual property. Best Buy’s supplier Battery Biz filed a petition with the PTAB requesting an inter partes review. Their request was granted. The parties subsequently settled resulting in a dismissal of the action against Best Buy and termination of the inter partes review.

 

We have and will continue to analyze alternatives to build and/or preserve value for our stakeholders, including, but not limited to, exploring additional investment and incremental financing from current and/or new investors, the engagement of advisors to assist in exploring strategic options for us as well as identifying potential partnerships for the purpose of monetizing some or all of our patent portfolio and past, present, and future infringement claims. However, there can be no assurances that we will be successful in identifying and/or implementing any of these alternatives, or if implemented, that any of these alternatives will successfully preserve or increase shareholder value.                      

 

 
7

 

 

COMARCO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

2.

Current Developments, Future Operations, Liquidity and Capital Resources (continued)

 

We believe that our patent portfolio covering key technical aspects of our products could potentially generate a future revenue stream based upon royalties paid to us by others for the use of some or all of our patented technology in third-party products. We continue to explore opportunities to expand, protect, and monetize our patent portfolio, including through the sale or licensing of our patent portfolio. We may or may not resume our traditional activities of producing innovative charging solutions for battery powered devices. There are no assurances that any of these potential opportunities or activities will occur or be successful.

  

3.

Summary of Significant Accounting Policies

 

The summary of our significant accounting policies presented below is designed to assist the reader in understanding our consolidated financial statements. Such financial statements and related notes are the representations of our management, who are responsible for their integrity and objectivity.

 

Basis of Presentation

 

The accompanying condensed consolidated balance sheet as of January 31, 2017, which has been derived from our audited financial statements, and our unaudited interim consolidated financial statements as of, and for the three and six months ended July 31, 2017 included herein have been prepared without audit in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information and with the instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Company believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the audited consolidated financial statements included in the Company’s annual report on Form 10-K for its fiscal year ended January 31, 2017 (the “2017 Form 10-K”), which was filed with the Securities and Exchange Commission, (“SEC”) on May 1, 2017. The accounting policies followed by the Company are set forth in Note 3 to the Company’s audited financial statements included in the 2017 Form 10-K. The unaudited interim consolidated financial information presented herein reflects all adjustments, consisting only of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of the consolidated results for the interim periods presented. The consolidated results for the three and six months ended July 31, 2017 are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2018.

 

Reclassification

 

Certain prior year and prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. 

 

Principles of Consolidation

 

The unaudited interim consolidated financial statements of the Company include the accounts of Comarco, Inc. and CWT, its wholly owned subsidiary. All material intercompany balances, transactions, and profits and losses have been eliminated.

 

 
8

 

 

COMARCO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

3.

Summary of Significant Accounting Policies (continued)

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the periods reported. Actual results could materially differ from those estimates.

 

Certain accounting principles require subjective and complex judgments to be used in the preparation of financial statements. Accordingly, a different financial presentation could result depending on the judgments, estimates, or assumptions that are used. Such estimates and assumptions include, but are not specifically limited to, those required in the valuation allowances for deferred tax assets and determination of stock-based compensation.

 

Cash and Cash Equivalents

 

All highly liquid investments with original maturity dates of three months or less when acquired are classified as cash and cash equivalents. The fair value of cash and cash equivalents approximates the amounts shown in the consolidated financial statements.

  

Fair Value of Financial Instruments

 

Our financial instruments include cash and cash equivalents, accounts payable and accrued liabilities. The carrying amount of cash and cash equivalents, accounts payable, and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments.

 

Legal expense classification

 

All legal expenses, including expenses related to our intellectual property litigation, maintenance of our patent portfolio, public company legal expense, and all other litigation expense, are included in selling, general, and administrative expenses in the accompanying condensed consolidated statement of operations.

 

Income tax expense

 

Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any required valuation allowance. We continue to maintain a full valuation allowance on the entire deferred tax asset balance. This valuation allowance was established based on management’s overall assessment of risks and uncertainties related to our future ability to realize, and hence, utilize certain deferred tax assets, primarily consisting of net operating loss carry forwards and temporary differences. Due to the current and prior years’ operating losses, the adjusted net deferred tax assets remained fully reserved as of July 31, 2017.

 

Net (Loss) Income Per Common Share

 

Basic net (loss) income per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period excluding the dilutive effect of potential common stock, which for us consists solely of stock awards. Diluted earnings per share reflects the dilution that would result from the exercise of all dilutive stock awards outstanding during the period. The effect of such potential common stock is computed using the treasury stock method (see Note 5).  

 

 
9

 

 

COMARCO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

3.

Summary of Significant Accounting Policies (continued)

 

Recent Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board “FASB” issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which is intended to improve financial reporting about leasing transactions. The new guidance will require lessees to recognize on their balance sheets the assets and liabilities for the rights and obligations created by leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 is effective for us in the first quarter of fiscal 2020. As we do not have any long-term leases, we do not expect the adoption of this updated authoritative guidance to have a significant impact on our consolidated financial statements.

 

In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, issued as a new Topic, ASC Topic 606 (ASU 2014-09). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The premise of the guidance is that a Company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 can be adopted by the Company either retrospectively or as a cumulative-effect adjustment as of the date of adoption. On April 1, 2015, the FASB decided to defer the effective date of the new revenue standard by one year. For public entities, the update is effective for financial statements issued for fiscal years beginning after December 15, 2018. ASU 2014-09 is effective for us in the first quarter of fiscal 2020. As we are not generating any ongoing revenue we do not expect the adoption of this updated authoritative guidance to have a significant impact on our consolidated financial statements.

 

We do not believe that any other recently issued, but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements.

 

Subsequent Events

 

Management has evaluated events subsequent to July 31, 2017 through the date the accompanying consolidated financial statements were filed with the Securities and Exchange Commission for transactions and other events that may require adjustment of and/or disclosure in such financial statements.

 

4.

Stock-Based Compensation

 

We grant stock awards for a fixed number of shares to employees, consultants’, and directors pursuant to our shareholder-approved equity incentive plans.

 

 
10

 

 

COMARCO, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

4.

Stock-Based Compensation (continued)

  

We account for stock-based compensation using the modified prospective method, which requires measurement of compensation cost for all stock awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes valuation model for options with ratable term vesting. The valuation model requires the input of subjective assumptions. These assumptions include estimating the length of time optionees will retain their vested stock options before exercising them (the “expected term”), the estimated volatility of our common stock price over the expected term, and the number of awards that will ultimately not complete their vesting requirements (“forfeitures”). Changes in these subjective assumptions can materially affect the estimate of fair value of stock-based compensation and, consequently, the related amount recognized as an expense on the consolidated statements of operations. As required under applicable accounting rules, we review our value stock-based awards granted in future periods. The values derived from using either the Lattice Binomial or the Black-Scholes model are recognized as an expense over the vesting period, net of estimated forfeitures. The estimation of stock awards that will ultimately vest requires significant judgment. Actual results, and future changes in estimates, may differ from our current estimates.

 

The compensation expense recognized is summarized in the table below (in thousands except per share amounts):

 

The total compensation cost related to unvested awards not yet recognized is approximately $6,750 and is expected to fully vest and be recognized as compensation expense by the third quarter of fiscal year 2018.

 

During the three and six months ended July 31, 2017 and 2016, no stock options and no restricted stock units were granted.

 

   

Three Months Ended

   

Six Months Ended

 
   

July 31,

   

July 31,

 
   

2017

   

2016

   

2017

   

2016

 
                                 

Stock-based compensation expense

  $ 7     $ 5     $ 12     $ 18  

Impact on basic and diluted earnings per share

  $ 0.00     $ 0.00     $ 0.00     $ 0.00  

 

Transactions and other information related to stock options granted under these plans for the three and six months ended July31, 2017 are summarized below:

 

   

Outstanding Options

 
           

Weighted-Ave.

 
   

Number of

   

Exercise

 
   

Shares

   

Price

 

Balance, January 31, 2017

    1,100,000     $ 0.37  

Options granted

    -       -  

Options canceled or expired

    -       -  

Options exercised

    -       -  

Balance, July 31, 2017

    1,100,000     $ 0.37  

Stock Options Exercisable at July 31, 2017

    760,000     $ 0.44  

 

 
11

 

       

As of July 31, 2017, the stock awards outstanding have an aggregate intrinsic value of $0, based on a closing market price of $0.03 per share on July 31, 2017. The following table summarizes information about the Company’s stock awards outstanding at July 31, 2017:

 

         

Awards Outstanding

   

Options Exercisable

 
                 

Weighted-Ave.

                         
                 

Remaining

   

Weighted-Ave.

           

Weighted-Ave.

 

Range of

   

Number

   

Contractural

   

Exercise/Grant

   

Number

   

Exercise

 

Exercise / Grant Prices

   

Outstanding

   

Life

   

Price

   

Exercisable

   

Price

 
$0.09           300,000       9.25     $ 0.09       -     $ 0.09  
$0.14 - $ 0.16       300,000       7.88     $ 0.15       300,000     $ 0.15  
$0.40            385,000       5.01     $ 0.40       385,000     $ 0.40  
$1.09            100,000       1.28     $ 1.00       60,000     $ 1.09  
$4.53            15,000       0.58     $ 4.53       15,000     $ 4.53  
            1,100,000                       760,000          

 

Shares available under the plans for future grants at July 31, 2017 totaled 323,535.

  

5.

Net (Loss) Income Per Share

 

We calculate basic (loss) income per share by dividing net (loss) income by the weighted-average number of common shares outstanding during the reporting period. Diluted (loss) income per share reflects the effects of dilutive potential common shares. Because we incurred a net loss for the three and six months ended July 31, 2017, basic and diluted loss per share for this period were the same because the inclusion of potential common shares would have been dilutive. For the three and six months ended July 31, 2016, basic and diluted income per share was the same as all potential common shares were antidilutive.

 

Potential common shares of 3,190,000 and 3,073,736 relating to outstanding warrants and to stock awards to directors and our employee have been excluded from diluted weighted average common shares for the three and six months ended July 31, 2017 and 2016, respectively, as the effect would have been antidilutive.

 

6.

Accrued Liabilities

 

Accrued liabilities consist of the following as of July 31, 2017 and January 31, 2017 (in thousands):

 

   

As of July 31,

   

As of January 31,

 
   

2017

   

2017

 
                 

Accrued legal and professional fees

  $ 124     $ 94  

Accrued payroll and related expesnses

    10       21  

Accrued consulting

    -       80  

Other

    166       189  
    $ 300     $ 384  

 

 
12

 

 

7.

Commitments and Contingencies

 

Executive Severance Commitments

 

We have a severance compensation agreement with our Chief Executive Officer, Thomas Lanni. This agreement requires us to pay Mr. Lanni, in the event of a termination of employment following a change of control of the Company or certain other circumstances, the amount of his then current annual base salary and the amount of any bonus amount he would have achieved for the year in which the termination occurs plus the acceleration of unvested options. We have not recorded any liability in the condensed consolidated financial statements for this agreement.

  

As of April 1, 2017, the Company’s independent directors elected to defer cash compensation as follows: the Chairman’s cash compensation was reduced from $4,500 per month to $3,000 per month with $1,500 deferred; the other independent directors’ cash compensation was reduced from $1,250 per month to $0 per month with $1,250 deferred. Cash compensation will continue to be deferred on a monthly basis as described above until such time as the Company files a Form 10-Q or Form 10-K disclosing cash net of liabilities in excess of $3.0 million, provided that the directors continue to serve the Company through the filing date.

 

Executive and Board of Directors Compensation

 

On November 2, 2013, the Company approved a deferred compensation plan for its Chief Executive Officer and Board of Directors. As of July 31, 2017, no compensation expense has been accrued under this deferred compensation plan as its goal has not yet been attained.

 

Legal Contingencies

 

On February 13, 2015, we filed a lawsuit against Best Buy for patent infringement under the patent laws of the United States. The complaint alleges that certain Best Buy power charging products sold in the United States under the Rocketfish brand infringe the Company’s patented intellectual property. Best Buy’s supplier Battery Biz filed a petition with the PTAB requesting an Inter Partes Review. Their request was granted. The parties subsequently settled resulting in a dismissal of the action against Best Buy and termination of the Inter Partes Review.

 

On February 3, 2015, we filed a lawsuit against Apple, Inc. for patent infringement. The complaint alleges that Apple products sold in the United States utilizing the Apple Lightning® power supply adapter system, including most iPad®, iPhone®, and iPod® products, infringe the Company’s patented intellectual property. This lawsuit represents our most significant enforcement effort to date, and, together with the Targus and Best Buy lawsuits described elsewhere in this document, demonstrates our ongoing and accelerated efforts to methodically pursue those companies that we believe have infringed on the intellectual property estate that we have developed over the last 20 years. In September of 2015, Apple filed a petition with the PTAB requesting inter partes review of our 933 Patent. On February 22, 2017, the PTAB issued its finding, ruling in Apple’s favor. We believe the PTAB erred in its ruling, and we are appealing the ruling to the Court of Appeals for the Federal Circuit. We estimate that the appeals process will require approximately 12 months to run its course. While we believe that the proceeds from our Series A Financing (see Note 8) should provide us sufficient capital to pursue the appeal for the next 12 months, it is possible that we may require incremental financing to pursue the appeal to conclusion, particularly if the appeals process runs longer than anticipated. If we require additional financing, there can be no assurance that we will be able to obtain requisite financing on acceptable terms, if at all.   

  

In addition to the pending matters described above, we are, from time to time, involved in various legal proceedings incidental to the conduct of our business. We are unable to predict the ultimate outcome of these matters.

 

 
13

 

 

8.

Subsequent Events

 

On September 11, 2017, we entered into subscription agreements (the “Subscription Agreements”) with our two largest existing shareholders, Broadwood Partners, L.P. (“Broadwood”) and Elkhorn Partners Limited Partnership (“Elkhorn”), pursuant to which Broadwood and Elkhorn subscribed for and purchased 5,000,000 and 2,000,000 shares, respectively, of our Series A Contingent Convertible Preferred Stock (“Series A Preferred Stock”) at a purchase price of $0.10 per share. The purchase of the Series A Preferred Stock closed on September 12, 2017, resulting in gross proceeds to the Company of $700,000. The Subscription Agreements also provide that upon the earlier of a Triggering Event (as described below) or immediately prior to the liquidation, dissolution or winding up of the Company (subject to the provisions of the Series A Preferred Stock), we will issue Broadwood and Elkhorn, for no additional consideration, warrants (the “Warrants”) to purchase 18,026,500 shares and 7,210,600 shares, respectively, of our common stock (“Common Stock”). If issued, the Warrants will have a term of eight years from the date of issuance and an exercise price of $0.05 per share of Common Stock. As defined in the certificate of determination for the Series A Preferred Stock, “Triggering Event” includes, among other things, (a) the Court of Appeals for the Federal Circuit (or other court of appeals with appropriate jurisdiction) overturns the decision of the PTAB issued on February 22, 2017 (the “PTAB Decision”) regarding obviousness of our 933 Patent, (b) the Court of Appeals for the Federal Circuit (or other court of appeals with appropriate jurisdiction) requires that the PTAB review and reconsider the PTAB Decision, (c) the United States Supreme Court decision in the case of Oil States Energy Services, LLC vs. Greene’s Energy Group, LLC (or in any subsequent case brought before the United States Supreme Court) declares the Inter Parties Review process unconstitutional or otherwise reaches a decision resulting in the vacating or invalidity of the PTAB Decision, provided that such United States Supreme Court decision is made prior to a Court of Appeals action described in foregoing subparts (a) or (b), or (d) the Company receives cumulative incremental additional funds from any source, other than borrowings or the issuance of securities, after September 6, 2017 in an amount at or in excess of $700,000.

 

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion and analysis should be read in conjunction with our unaudited interim consolidated financial statements and the related notes and other financial information appearing elsewhere in this quarterly report on Form 10-Q.

 

Forward-Looking Statements

 

This report on Form 10-Q contains statements relating to our future plans and developments, financial goals and operating performance that are based on our current beliefs and assumptions. These statements constitute “forward-looking statements” within the meaning of federal securities laws. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “could,” “may,” “should,” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements.

 

Although forward-looking statements in this report reflect the good faith judgment of our management, such statements are only based on facts and factors known by us as of the date of this report. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically referenced under the section below entitled “Risk Factors,” as well as those discussed elsewhere in this report and in our other filings” with the Securities and Exchange Commission (“SEC”). Readers are urged not to place undue reliance on these forward-looking statements, which reflect information as of the date of this report.

 

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, whether as a result of new information, future events or otherwise, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations, and prospects.

 

 
14

 

 

In addition to the risks, uncertainties, and other factors discussed above or elsewhere in this report, additional risks, uncertainties, and other factors that could cause or contribute to actual results differing materially from those expressed or implied in any forward-looking statements include, without limitation, those set forth under Part I, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2017 (the “2017 Form 10-K”) filed with the SEC and those contained in the Company’s other filings with the SEC. Readers of this report are urged to review the descriptions of the risks, uncertainties and other factors contained in those other reports.

 

Going Concern

 

As of July 31, 2017, we had negative working capital of $169,000. We have ceased traditional operations and our currently generating no revenue. As discussed in Note 8 of the Condensed Consolidated Financial Statements included elsewhere in this report, on September 12, 2017, we sold 7,000,000 shares of our Series A Participating Preferred Stock for gross proceeds to us in the amount of $700,000 (“Series A Financing”). We believe the proceeds from our Series A Financing will provide us sufficient capital to allow us to discharge our liabilities and commitments in the normal course of business over the next twelve months. However, our ability to continue to operate as a going concern beyond that period is highly dependent on our ability to successfully resolve our current litigation, monetize our portfolio of patents, generate positive cash flow and/or obtain borrowings or raise additional capital.

 

Our business is currently focused on potentially realizing value from our ongoing or future IP enforcement actions and other litigation as well as further exploring opportunities to expand, protect, and monetize our patent portfolio, including through the potential sale or licensing of some of all of our patent portfolio.

 

On February 3, 2015, we filed a lawsuit against Apple, Inc. (“Apple”) for patent infringement. The complaint alleges that Apple products sold in the United States utilizing the Apple Lightning® power supply adapter system, including most iPad®, iPhone®, and iPod® products, infringe the Company’s patented intellectual property. This lawsuit represents our most significant enforcement effort to date, and, together with the Targus and Best Buy lawsuits described elsewhere in this document, demonstrates our ongoing and accelerated efforts to methodically pursue those companies that we believe have infringed on the intellectual property estate that we have developed over the last 20 years. In September of 2015, Apple filed a petition with the Patent Trial and Appeal Board (the “PTAB”) of the United States Patent and Trademark Office requesting Inter Partes Review of our U.S. Patent No. 8,492,933 B2 (the “933 Patent”). On February 22, 2017, the PTAB issued its finding, ruling in Apple’s favor. We believe the PTAB erred in its ruling, and we are appealing the ruling to the Court of Appeals for the Federal Circuit. We estimate that the appeals process will require approximately 12 months to run its course. While we believe that the proceeds from our Series A Financing should provide us sufficient capital to pursue the appeal for the next 12 months, it is possible that we may require incremental financing to pursue the appeal to conclusion, particularly if the appeals process runs longer than anticipated. If we require additional financing, there can be no assurance that we will be able to obtain requisite financing on acceptable terms, if at all.

 

On February 13, 2015, we filed a lawsuit against Best Buy for patent infringement under the patent laws of the United States. The complaint alleges that certain Best Buy power charging products sold in the United States under the Rocketfish brand infringe the Company’s patented intellectual property. Best Buy’s supplier Battery Biz filed a petition with the PTAB requesting an inter partes review. Their request was granted. The parties subsequently settled resulting in a dismissal of the action against Best Buy and termination of the inter partes review. 

 

We have and will continue to analyze alternatives to build and/or preserve value for our stakeholders, including, but not limited to, exploring additional investment and incremental financing from current and/or new investors, the engagement of advisors to assist in exploring strategic options for us as well as identifying potential partnerships to monetizing some or all of our patent portfolio and past, present, and future infringement claims. However, there can be no assurances that we will be successful in identifying and/or implementing any of these alternatives, or if implemented, that any of these alternatives will successfully preserve or increase shareholder value. 

 

 
15

 

 

Basis of Presentation

 

The consolidated results of our operations presented in this report are not audited and are not necessarily indicative of the results to be expected for the entirety of the fiscal year ending January 31, 2018 or any other interim period during such year. Our fiscal year ends on January 31 and our fiscal quarters end on April 30, July 31, and October 31. Unless otherwise stated, all dates refer to our fiscal year and those fiscal quarters.

 

Executive Summary

 

Comarco, Inc. was incorporated in California in 1960 and its common stock has been publicly traded since 1971, when it was spun-off from Genge Industries, Inc. Comarco Inc.’s wholly-owned subsidiary Comarco Wireless Technologies, Inc. (“CWT”) was incorporated in the state of Delaware in September 1993. Comarco and CWT are collectively referred to as “we,” “us,” “our,” “Comarco,” or the “Company”.

 

We are primarily focused on potentially realizing value from our ongoing IP enforcement actions and other litigation as well as exploring opportunities to further expand, protect, and monetize our patent portfolio, including through the potential sale or licensing of our patent portfolio.

 

In addition to the risks, uncertainties and factors discussed elsewhere in this quarterly report on Form 10-Q and in the Company’s other filings with the SEC, management currently considers the following additional trends, events, and uncertainties to be important to understanding our results of operations for the three and six months ended July 31, 2017 and 2016:

 

 

We generated approximately $6,000 royalty income for the three and six months ended July 31, 2017 and 2016. We anticipate that we will generate minimal future revenues from the development, design, royalties and distribution or sale of any products.

  

 

On March 26, 2016, we entered into a confidential settlement and license agreement with Targus that resolves all claims arising from our litigation with Targus. Pursuant to the terms of the settlement agreement, we granted Targus a world-wide license to make, use, sell and distribute Licensed Products (as defined by the agreements), as well as a sublicense to have Licensed Products manufactured by third parties solely for the benefit of and sale to Targus. In addition, we granted Targus, for a limited number of units, the right to make, use, sell and distribute Licensed Products for third-party OEMs. In exchange for the license granted under the settlement agreement, Targus paid us a one-time, lump-sum payment on April 1, 2016, plus future per-unit royalty payments if Targus exceeds the limit on Licensed Products that Targus may sell to OEMs under the settlement agreement. We have been granted confidential treatment from the SEC related to the one-time payment, the calculation of royalty payments and the OEM unit limit pursuant to a confidential treatment request filed by the SEC.

  

 

On February 13, 2015, we filed a lawsuit against Best Buy for patent infringement under the patent laws of the United States. The complaint alleges that certain Best Buy power charging products sold in the United States under the Rocketfish brand infringe our patented intellectual property. Best Buy’s supplier Battery Biz filed a petition with the PTAB requesting an inter partes review. Their request was granted. The parties subsequently settled resulting in a dismissal of the action against Best Buy and termination of the inter partes review.

 

 

On February 3, 2015, we filed a lawsuit against Apple for patent infringement. The complaint alleges that Apple products sold in the United States utilizing the Apple Lightning® power supply adapter system, including most iPad®, iPhone®, and iPod® products, infringe our patented intellectual property. This lawsuit represents our most significant enforcement effort to date, and, together with the Targus and Best Buy lawsuits described elsewhere in this document, demonstrates our ongoing and accelerated efforts to methodically pursue those companies that we believe have infringed on the intellectual property estate that we have developed over the last 20 years. In September of 2015, Apple filed a petition with PTAB requesting inter partes review of our 933 Patent. On February 22, 2017, the PTAB issued its finding, ruling in Apple’s favor. We believe the PTAB erred in its ruling, and we are appealing the ruling to the Court of Appeals for the Federal Circuit. We estimate that the appeals process will require approximately 12 months to run its course. While we believe that the proceeds from our Series A Financing (see Note 8) should provide us sufficient capital to pursue the appeal for the next 12 months, it is possible that we may require incremental financing to pursue the appeal to conclusion, particularly if the appeals process runs longer than anticipated. If we require additional financing, there can be no assurance that we will be able to obtain requisite financing on acceptable terms, if at all.

  

 
16

 

 

Critical Accounting Policies

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our unaudited interim consolidated financial statements appearing elsewhere in this report, which have been prepared in accordance with GAAP. The preparation of these unaudited interim condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from our estimates.

 

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used or changes in the accounting estimate that are reasonably likely to occur could materially change the financial statements. Management believes there have been no significant changes during the three and six months ended July 31, 2017 to the items that we disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our annual report on Form 10-K for the fiscal year ended January 31, 2017.

 

Results of Operations

 

The following tables set forth certain items as a percentage of revenue from our unaudited interim consolidated statements of operations for the three and six months ended July 31, 2017 and 2016:

 

   

Three Months Ended

   

Six Months Ended

                 
   

July 31,

   

July 31,

   

Year over Year

 
                                   

Three

   

Six

 
   

2017

   

2016

   

2017

   

2016

   

Months

   

Months

 
                                                 

Revenues

  $ 6     $ -     $ 6     $ -       100

%

    100

%

Operating income (loss)

  $ (196 )   $ 112     $ (418 )   $ (252 )     288

%

    67

%

Net income (loss)

  $ (196 )   $ 128     $ (418 )   $ 1,452       255

%

    (129

)%

 

Cost of Sales

 

   

(in thousands)

Three Months Ended

July 31,

   

(in thousands)

Six Months Ended

July 31,

   

Year over Year

 
                                                                   

Three

   

Six

 
   

2017

   

2016

   

2017

   

2016

   

Months

   

Months

 
           

% of

           

% of

           

% of

           

% of

                 
           

Total

           

Total

           

Total

           

Total

                 

Cost of revenue

                                                                               

Product costs

  $ -       0

%

            0

%

  $ -       0

%

  $ -       0

%

    0

%

    0

%

Supplier settlement

    -       0

%

    (472 )     0

%

    -       0

%

    (472 )     0

%

    0

%

    100

%

Supplier chain overhead

    -       0

%

            0

%

    -       0

%

    -       0

%

    0

%

    0

%

Inventory reserve and scrap charges

    -       0

%

    -       0

%

    -       0

%

    -       0

%

    0

%

    0

%

    $ -       0

%

  $ (472 )     0

%

  $ -       0

%

  $ (472 )     0

%

    0

%

    100

%

 

During the six months ended July 31, 2016, we determined that the statute of limitations on the Zheng Ge contracts has lapsed. As a direct result, we wrote off receivables of $0.1 million from and liabilities of $0.6 million to Zheng Ge.

 

 
17

 

 

Operating Costs and Expenses 

 

   

(in thousands)

Three Months Ended

July 31,

   

(in thousands)

Six Months Ended

July 31,

   

Year over Year

 
                                                                   

Three

   

Six

 
   

2017

   

2016

   

2017

    2016    

Months

   

Months

 
           

% of Rev

           

% of Rev

           

% of Rev

           

% of Rev

                 

Operating Expenses

                                                                               

Selling, general and administrative expenses

  $ 202       3,417

%

    360       0

%

  $ 424       7,117

%

  $ 724       0

%

    43

%

    41

%

    $ 202       3,417

%

  $ 360       0

%

  $ 424       7,117

%

  $ 724       0

%

    43

%

    41

%

 

Selling, general, and administrative (“SG&A”) expenses for the three and six months ended July 31, 2017 decreased approximately to $202,000 and $424,000 respectively compared to the corresponding period of July 31, 2016 incurred related to our intellectual property and maintenance of our patent portfolio, litigation expenses, and other professional fees. We had no employees in our sales and marketing department during the three and six months ended July 31, 2017 and 2016. General and administrative related expenses consist of the salary of our only employee, our Chief Executive Officer and President, as well as professional fees, directors’ fees, and other costs and expenses attributable to being a public company.

 

Other Income, net

 

During the three and six months ended July 31, 2017 and 2016, other income, net, was $0 and approximately $16,000, and $0 and $1.7 million respectively. Other income net for the six months ended July 31, 2016 was related to the Company’s settlement with Targus.  

 

Income Tax Expense

 

Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any required valuation allowance. We continue to maintain a full valuation allowance on the entire deferred tax asset balance. This valuation allowance was established based on management’s overall assessment of risks and uncertainties related to our future ability to realize, and hence, utilize certain deferred tax assets, primarily consisting of net operating loss carry forwards and temporary differences. Due to the current and prior years’ operating losses, the adjusted net deferred tax assets remained fully reserved as of July 31, 2017.

 

Liquidity and Capital Resources

 

Cash and cash equivalents decreased approximately $618,000 from January 31, 2016 to $101,000 at July 31, 2017.

 

   

(in thousands)

 
   

Six Months Ended July 31,

 
   

2017

   

2016

 
                 

Cash provided by (used in):

               

Operating activities

  $ (517 )   $ 454  

Investing activites

  $ -     $ -  

Financing activities

  $ -     $ -  

  

Operating Activities

 

Cash used in operating activities was approximately $517,000 for the six months ended July 31, 2017 and was primarily used to pay off the Company’s accounts payable.

 

Cash provided by operating activities was approximately $454,000 for the six months ended July 31, 2016 and was primarily driven by the Company’s net income of approximately $1.4 million.

 

 
18

 

 

Investing Activities

 

We had no investing activities during the six months ended July 31, 2017 and 2016. 

 

Financing Activities

 

We had no financing activities during the six months ended July 31, 2017 and 2016.  

 

ITEM 4.

CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer (Principal Executive Officer) and Interim Chief Accounting Officer (Principal Financial Officer), to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 

In accordance with SEC rules, an evaluation was performed under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer of the effectiveness, as of July 31, 2017, of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). “Internal control over financial reporting” includes those policies and procedures that: 

 

 

(1)

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

 

 

(2)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and

 

 

(3)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material effect on the financial statements.  

 

Based on that evaluation, our Chief Executive Officer and Interim Chief Accounting Officer concluded that our disclosure controls and procedures were not effective based on our material weakness in the form of lack of segregation of duties, which stems from our limited capital resources. In order to remedy our lack of segregation of duties, we would need to raise additional capital or improve our capital position to hire additional financial and administrative staff

 

 
19

 

 

Internal Control over Financial Reporting

 

There was no change in our internal control over financial reporting that occurred during the quarter ended July 31, 2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II — OTHER INFORMATION

 

 

ITEM 1.

LEGAL PROCEEDINGS

 

Comarco, Inc. vs. Apple Inc., Case No. 8:15-cv-00145, United States District Court for the Central District of California. 

 

On February 3, 2015, we filed a lawsuit against Apple for patent infringement. The complaint alleges that Apple products sold in the United States utilizing the Apple Lightning® power supply adapter system, including most iPad®, iPhone®, and iPod® products, infringe our patented intellectual property. In September of 2015, Apple filed a petition with PTAB requesting inter partes review of our 933 Patent. On February 22, 2017, the PTAB issued its finding, ruling in Apple’s favor. We believe the PTAB erred in its ruling, and we are appealing the ruling to the Court of Appeals for the Federal Circuit. While we believe that the proceeds from our Series A Financing should provide us sufficient capital to pursue the appeal for the next 12 months, it is possible that we may require incremental financing to pursue the appeal to conclusion, particularly if the appeals process runs longer than anticipated. If we require additional financing, there can be no assurance that we will be able to obtain requisite financing on acceptable terms, if at all.

 

Comarco, Inc. vs. Best Buy Co. Inc., Case No. 8:15-cv-00256, United States District Court for the Central District of California. 

 

On February 13, 2015, we filed a lawsuit against Best Buy for patent infringement under the patent laws of the United States. The complaint alleges that certain Best Buy power charging products sold in the United States under the Rocketfish brand infringe our patented intellectual property. Best Buy’s supplier Battery Biz filed a petition with the PTAB requesting an inter partes review. Their request was granted. The parties subsequently settled resulting in a dismissal of the action against Best Buy and termination of the inter partes review.       

 

In addition to the matters described above, we are from time to time involved in various legal proceedings incidental to the conduct of our business. The legal proceedings potentially cover a variety of allegations spanning our entire business. We are unable to predict the ultimate outcome of all such matters.

 

 

ITEM 1A.

RISK FACTORS

 

Our business, financial condition and operations are subject to several factors, risks and uncertainties, including those previously disclosed under Part I. Item 1A “Risk Factors” of our annual report on 2017 Form 10-K as well as any amendments thereto or additions and changes thereto contained in any subsequent filings of quarterly reports on Form 10-Q or current reports on Form 8-K. The disclosures in our annual report on Form 10-K and our subsequent reports and filings are not necessarily a definitive list of all factors that may affect our business, financial condition and future results of operations. There have been no material changes to the risk factors as disclosed in 2017 Form 10-K.

 

 
20

 

 

ITEM 6.

EXHIBITS

 

31.1 *

Certification of Principal Executive Officer and Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

31.2* Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

32.1 *

Certification of Principal Executive Officer and Principal Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

  

101.INS*

XBRL Instance Document

 

101.SCH*

XBRL Taxonomy Extension Schema Document

 

101.CAL*

XBRL Taxonomy Extension Calculation Linkable Document

 

101.DEF*

XBRL Taxonomy Definition Linkbase Document

 

101.LAB*

XBRL Taxonomy Extension Label Linkbase Document

 

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document

 

______________

 

 *

Filed herewith.

 

 
21

 

 

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.

 

 

 

COMARCO, INC.

 

 

 

 

 

 

 

Date: September 14, 2017

/s/ THOMAS W. LANNI

 

 

Thomas W. Lanni

President, Chief Executive Officer and Interim

Chief Accounting Officer

(Principal Executive Officer and Principal

Financial Officer)

 

 

 
22

 

 

EXHIBIT INDEX

 

 

Exhibit

Description

 

31.1 *

Certification of Principal Executive Officer and Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

31.2* Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

32.1 *

Certification of Principal Executive Officer and Principal Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

101.INS*

XBRL Instance Document

 

101.SCH*

XBRL Taxonomy Extension Schema Document

 

101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document

 

101.DEF*

XBRL Taxonomy Definition Linkbase Document

 

101.LAB*

XBRL Taxonomy Extension Label Linkbase Document

 

101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document

 

______________

 

 *

Filed herewith.

 

 

23