SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(A) of the
Securities
Exchange Act of 1934 (Amendment No. )
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Comarco, Inc.
COMARCO, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be HeldJuly 21, 2011
To the Shareholders of Comarco, Inc.:
The 2011 Annual Meeting of the Shareholders (the “Annual Meeting”) of Comarco, Inc., a California corporation (the “Company”, “we,” “us” or “our”), will be held on July 21, 2011January 28, 2015 at 3:10:00 p.m.a.m., local time, at the Company’s corporate offices, which are located at 25541 Commercentre Drive, Suite 250, Lake Forest, CA 92630, for the following purposes:
1. | To elect six directors to each serve a one-year term; |
2. | To hold an advisory vote to approve the compensation of our named executive officers, as described in the proxy statement; |
3. | To ratify the appointment by the Company’s Audit Committee of Squar, Milner, Peterson, Miranda & Williamson LLP as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 2015; |
4. | To transact such other business as may properly come before the meeting or any adjournment thereof. |
The Board of Directors of the Company intends to present Michael R. Levin, Paul Borowiec, Wayne G. Cadwallader, Thomas W. Lanni, Richard T. LeBuhn, Michael R. Levin and Michael H. MulroyLouis E. Silverman as nominees for election as directors at the annual meeting.
Only holders of record of the Company’s common stock at the close of business on May 31, 2011January 9, 2015 are entitled to notice of and to vote at the Annual Meeting.
Each shareholder is cordially invited to attend and vote in person at the Annual Meeting. TOMeeting.TO ASSURE REPRESENTATION AT THE ANNUAL MEETING, HOWEVER, SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSEDSUBMIT THEIR PROXY AS PROMPTLYSOON AS POSSIBLE BY INTERNET, TELEPHONE OR MAIL AS DESCRIBED IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.PROXY STATEMENT AND PROXY CARD ACCOMPANYING THIS NOTICE. Shareholders who attend the Annual Meeting may still vote in person, even if they have previously voted by proxy.
OUR BOARD OF DIRECTORS RECOMMENDS: A VOTE “FOR” EACH OF THESIX DIRECTOR NOMINEES NAMED IN THE PROXY STATEMENT;ANDA VOTE “FOR” PROPOSALS2 AND 3.
BY ORDER OF THE BOARD OF DIRECTORS | ||
/s/ Janet Nguyen Gutkin | ||
Janet Nguyen Gutkin, | ||
Lake Forest, CaliforniaJune 10, 2011
January 9, 2015
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE2011
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JULY 21, 2011
This notice, as well as the accompanying Proxy Statementproxy statement and our 2011the Company’s Annual Report to Shareholderson Form 10-K for the fiscal year ended January 31, 2014, will be available online on or about June 10, 2011January 13, 2015 atwww.edocumentview.com/cmro. Information contained on our website other than these materials, is not part of the proxy soliciting material.
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GENERAL INFORMATION | 3 | |||
VOTING RIGHTS | 4 | |||
| ELECTION OF DIRECTORS | 5 | |||
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| INFOMATION | 20 | |||
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PROPOSAL NO. 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING | 20 | |||
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25541 Commercentre Drive, Suite 250
Lake Forest, CA 92630
(949) 599-7400
PROXY STATEMENT
For the Annual Meeting of Shareholders
To Be HeldJuly 21, 2011
January 2
GENERAL INFORMATION
The Board of Directors (the “Board”) of Comarco, Inc., a California corporation (the “Company”, “Comarco”, “we,” “us” or “Comarco”“our”), is soliciting proxies to be voted at the 2011 Annual Meeting of Shareholders (the “Annual Meeting”) to be held on July 21, 2011January 28, 2015 at 3:10:00 p.m.a.m., local time, at the Company’s corporate offices, which are located at 25541 Commercentre Drive, Suite 250, Lake Forest, CA 92630, or any postponement(s) or adjournment(s) thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. Shareholders may obtain directions to the Annual Meeting by writing to the Company at its corporate offices or by calling (949) 599-7400.599-7551. This Proxy Statement,proxy statement, the accompanying form of proxy card, and our 2011the Company’s Annual Report to shareholders (the “Annual Report”),on Form 10-K for the fiscal year ended January 31, 2014, are first being mailed to shareholders on or about June 10, 2011.
A shareholder giving a proxy has the power to revoke it at any time before it is exercised by (1) filing with the Secretary of the Company an instrument in writing revoking the proxy, (2) filing with the Secretary of the Company a duly executed proxy bearing a later date, (3) voting again on the Internet or (3)by telephone (only your latest Internet or telephone proxy submitted prior to 1:00 a.m. Eastern Standard Time on Tuesday, January 27, 2015 will be counted) or (4) attending the Annual Meeting and voting the shares in person. In the absence of such revocation, all shares represented by a properly executed proxy received in time for the Annual Meeting will be voted as specified therein. In the event that you return a signed proxy card on which no directions are specified, your shares will be voted “FOR” the amendment of the Company’s Amended and Restated Bylaws (the “Bylaws”), “FOR” each of the fivesix director nominees, “FOR” the adoptionapproval of the Company’s 2011 Equity Incentive Plan (the “2011 Plan”) andcompensation of our named executive officers, “FOR” the ratification of the appointment of Squar, Milner, Peterson, Miranda & Williamson LLP as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 20122015 (“fiscal 2012”2015”), and in the discretion of the proxy holders as to any other matters that may properly come before the Annual Meeting or any postponement or adjournment of the Annual Meeting.thereof. If you sign and return the enclosed proxy, and if cumulative voting procedures are in effect (see “VOTING RIGHTS” below for additional information regarding such procedures), the proxyholders named in the accompanying proxy will have the right in their discretion to cumulate votes represented by the proxies that they hold, and to cast such cumulated votes among all or any of the nominees in such manner as they deem appropriate, provided that the proxyholders may not cast a vote from your shares for a nominee with regard to whom you withheld authority to vote.
The cost of preparing, assembling, printing and mailing this Proxy Statement, the accompanying form of proxy and the Annual Report,materials and the cost of soliciting proxies will be borne by the Company. The Company may make arrangements with various brokerage houses or other nominees to send proxy materials to the beneficial owners of stock and may reimburse them for their reasonable expenses in connection therewith.
The Company’s officers, employees and directors may supplement the original solicitation of proxies personally or by telephone, facsimile, email, mail or other means of communication. We will pay no additional compensation to such persons for any of these activities. Additionally, the Company may engage a proxy solicitation firm to assist in the solicitation of proxies personally or by telephone, facsimile, email, mail or other means of communication, although it has no present plans to do so. If the Company engages a proxy solicitation firm to assist in the solicitation of proxies, the Company estimates that the fees paid to such firm would not exceed $5,000 plus out-of-pocket expenses.
If a shareholder shares an address with another shareholder, each shareholder may not receive a separate copy of our proxy materials, our Annual ReportForm 10-K and most other mailings, unless we have received contrary
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This Proxy Statement,proxy statement, the accompanying notice of Annual Meeting and the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2014 are available online atwww.edocumentview.com/cmro.cmro. Information contained on our website other than these materials, is not part of the proxy soliciting material.
Attendance at the Annual Meeting is limited to shareholders and holders of valid proxies. You may be asked to present a valid form of government-issued personal identification such as a driver’s license or passport. Cameras and other recording devices will not be permitted at the Annual Meeting. If your shares are held in street name and you would like to attend the Annual Meeting, you should ask the broker, bank, trust or other nominee which holds the shares to provide you with evidence of your share ownership, which will enable you to gain admission to the Annual Meeting.
VOTING RIGHTS
The Company’s only outstanding class of voting securities is its common stock. Only shareholders of record at the close of business on May 31, 2011January 9, 2015 will be entitled to vote at the Annual Meeting. At May 31, 2011,January 9, 2015, there were 7,343,86914,684,165 shares of common stock outstanding. The holders of record of a majority of the outstanding shares of common stock entitled to vote at the Annual Meeting, present in person or by proxy, will constitute a quorum for the transaction of business. Each share is entitled to one vote, except that each shareholder is entitled to cumulate his or her shares in the election of directors, provided that at least one shareholder has given notice at the Annual Meeting and prior to the voting of the shareholder’s intention to do so. If cumulative voting is in effect, each shareholder may cumulate votes for one or more candidates, provided that the name(s) of such candidate or candidates have been properly placed in nomination prior to the voting. To cumulate votes, a shareholder may vote for any one candidate a number of votes equal to the number of directors to be elected multiplied by the number of shares held by the shareholder, or alternatively, distribute any such votes among as many of the candidates as the shareholder deems appropriate. If cumulative voting procedures are invoked, the proxy holders indicated in the accompanying proxy will have the right in their discretion to cumulate votes represented by the proxies that they hold, and to cast such cumulated votes among all or any of the nominees in such manner as they deem appropriate, provided that the proxyholders may not cast a vote from your shares for a nominee with regard to whom you withheld authority to vote.
We encourage you to vote promptly. You may vote in one of the following ways:
By Internet. If you are a holder of record, you can vote your proxy over the Internet. The enclosed proxy card indicates the website you may access for Internet voting. You will be able to confirm that the system has properly recorded your votes. You may incur costs such as Internet access charges if you vote by the Internet.
By Telephone. If you are a holder of record and are located in the U.S. or Canada, you can vote your proxy by calling the toll-free telephone number on the proxy card. The telephone voting system has easy-to-follow instructions and allows you to confirm that the system has properly recorded your votes. If you vote by telephone, you do not need to return your proxy card.
By Mail. If you are a holder of record and are located in the U.S., you can vote by marking, dating and signing your proxy card and returning it by mail in the enclosed postage-paid envelope. If you are located outside the U.S., you should add the necessary postage to the enclosed envelope to assure delivery. In order to ensure that your vote is received on or prior to the date of the Annual Meeting, we recommend that your proxy card be returned to us by overnight mail.
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At the Annual Meeting. The way you vote your shares of common stock now will not limit your right to change your vote at the Annual Meeting if you attend in person. If you attend the Annual Meeting, we will give you a ballot when you arrive. However, if you hold shares through a broker, bank or other nominee, you must provide a legal proxy from such broker, bank or nominee evidencing your authority to vote shares that the institution or other nominee held for your account at the close of business on May 31, 2011.January 9, 2015. You must contact your broker, bank or other nominee directly in advance of the Annual Meeting to obtain a legal proxy.
Whether or not you attend the Annual Meeting, if your shares of common stock are held by a broker, bank or other nominee in “street name,” then you must obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct the broker to vote your shares.
If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, the organization may generally vote on your behalf on “routine” matters but cannot vote on “non-routine” matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.” The election of directors adoptionand the approval of the 2011 Plan and amendment to the Company Bylawscompensation of our named executive officers are not considered “routine” matters under applicable rules. Therefore, a broker or other nominee cannot vote your shares with respect to these matters without instructions from you on how to vote your shares. In order to minimize the number of broker non-votes, the Company urges you to provide voting instructions to the organization that holds your shares. The ratification of the appointment of Squar, Milner, Peterson, Miranda & Williamson LLP as the Company’s independent registered public accounting firm for fiscal 2012year ending January 31, 2015 is considered a routine matter under the applicable rules and a broker or other nominee may generally vote your shares on this matter without instructions from you.
Abstentions and broker non-votes will be counted for purposes of determining the existence of a quorum at the Annual Meeting.
With respect to the election of directors, the fivesix nominees receiving the greatest number of votes at the Annual Meeting shall be elected as directors. Abstentions and broker non-votes will have no effect on the election of any director.
An affirmative vote of the holders of a majority of shares of common stock present or represented by proxy at the Annual Meeting will be required to approve the advisory vote to approve the compensation of our named executive officers. Abstentions and broker non-votes may affect the outcome of this proposal because abstentions and broker non-votes are counted for purposes of determining the quorum and have the effect of a vote against this proposal.
An affirmative vote of the holders of a majority of the shares of common stock present or represented by proxy at the Annual Meeting, and voting on the proposal, will be required to adopt the 2011 Plan and ratify the appointment of Squar, Milner, Peterson, Miranda & Williamson LLP as the Company’s independent registered public accounting firm.firm for the Company’s fiscal year ending January 31, 2015. Abstentions and broker non-votes will have no effect on the outcome of either proposal Broker non-votes will not be counted for any purpose in determining whether the proposal to adopt the 2011 Plan will be approved. However, because the ratification of the appointment of the independent registered public accounting firm is a routine matter, broker non-votes will not result for this proposal.
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Six directors will be elected at the Annual Meeting. Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated Michael R. Levin, Paul Borowiec, Wayne G. Cadwallader, Thomas W. Lanni, Richard T. LeBuhn, Michael R. Levin and Michael H. MulroyLouis E. Silverman for election as directors. Jeffrey R. Hultman, a current director, has informed the Company that he is declining to stand for reelection to the Board.
Each nominee has consented to be named in the Proxy Statementthis proxy statement as a nominee and has agreed to serve as a director if elected. Directors are elected at each annual meeting to hold office until the next annual meeting of shareholders andor until their successors are duly elected and qualified. Unless cumulative voting is in effect, it is intended that the shares represented by the enclosed proxy will be voted, unless otherwise instructed, for the election of the fivesix nominees of the Board. While the Company has no reason to believe that any of the nominees will be unable to serve as a director, it is intended that if such an event should occur, such shares will be voted for the remainder of the nominees and for such substitute nominee or nominees as may be selected by the Board, unless a shareholder withholds authority to vote his shares (i) for all of the nominees by so indicating on the enclosed proxy card or, if voting by Internet or telephone, by following the appropriate instructions, or (ii) for any one or more of the nominees by checking their names in the space provided on such card or, if voting by Internet or telephone, by following the appropriate instructions, in which case his shares will not be voted for such nominee or nominees. If cumulative voting is in effect for the election of directors, the proxy holders named on the Company’s proxy card will have the discretion to cumulate votes as provided by California law (see “VOTING RIGHTS” above)above for additional information) and to distribute such votes among all or any of the nominees in such manner as they deem appropriate,appropriate; provided that the proxyholders may not cast a vote from your shares for a nominee with regard to whom you withheld authority to vote.
All of the nominees except for Mr. Mulroy are currently serving as directors of the Company.Company and all were elected at last year’s annual meeting. The term of office of each of the current directors expires on the date of the Annual Meeting. Mr. LeBuhn was elected at the 2010 annual meeting of shareholders. Messrs. Borowiec, Cadwallader and Levin were appointed to the Board on February 23, 2011, March 10, 2011 and March 15, 2011, respectively.
THE BOARD RECOMMENDS A VOTE “FOR”
EACH OF THE BOARD’S NOMINEES.
The following table sets forth information concerning the nominees and is followed by a brief biography of each nominee.
| Year | ||||||||
| First | Other Public | |||||||
| Elected | Company | |||||||
Name | Age | Principal Position | Director | Directorships | ||||
| Michael R. Levin | 49 | Chairman of the Board | 2011 | None | ||||
| Paul Borowiec | 34 | Director | 2011 | None | ||||
| Wayne G. Cadwallader | 54 | Director | 2011 | None | ||||
| Richard T. LeBuhn | 46 | Director | 2008 | None | ||||
| Michael H. Mulroy | 45 | Director | N/A | None |
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Year First | Other Public | |||
Elected/Appointed | Company Directorships | |||
Name | Age | Principal Comarco Position | As Director | (Past Five Years) |
Paul Borowiec | 38 | Director | 2011 | None |
WayneG.Cadwallader | 58 | Director | 2011 | None |
Thomas W. Lanni | 61 | Director and President and Chief Executive Officer | 2011 | None |
Richard T.LeBuhn | 49 | Director | 2008 | Asterias Biotherapeutics, Inc. |
MichaelR.Levin | 52 | Director | 2011 | None |
Louis E. Silverman | 56 | Chairman of the Board | 2012 | Questcor Pharmaceuticals, Inc., STAAR Surgical Co |
In January 2015, Mr. Borowiec founded Norfield Capital LLC, a registered investment advisor. He currently serves as the Chief Investment Officer at Norfield Capital LLC. Most recently Mr. Borowiec was a Vice President of Investments at Source Capital Group, a position he has held sincefrom June 2009.2009 to January 2015. Mr. Borowiec iswas also the Managing Partner of Source Opportunity Fund LLC at Source Capital Group. Most recentlyPrior to Source Capital Group, Mr. Borowiec was an investment analyst for StoneWater Capital LLC, a position he held from May 2005 to June 2008, where he shared responsibilities in managing their domestic business. Prior to StoneWater Capital, Mr. Borowiec was a research analyst for Neuberger Berman. Prior to Neuberger Berman, Mr. Borowiec worked for American Skandia as a portfolio analyst in the investment management group. Mr. Borowiec holds a B.S. in International Business from Fairfield University.
Mr. Borowiec’s qualifications to serve on our Board of Directors include, among other skills and qualifications,amongst others, his extensive experience as an investor in public companies, including technology related companies and his extensive financial analyst background.
Wayne Cadwalladeris Managing Partner — Research for Elkhorn Partners LP, a long-time investor in Comarco.Comarco, that beneficially owns approximately 49% of our outstanding common stock as of the record date for the Annual Meeting. An experienced securities analyst, Mr. Cadwallader has extensive knowledge of numerous industries including technology, insurance, retail, manufacturing, and real estate. Mr. Cadwallader also has substantial expertise in information technology gained through numerous management positions and in management consulting. Prior to joining Elkhorn Partners, Mr. Cadwallader worked for Hamblin Watsa Investment Counsel Ltd., from October 2000 to June 2010, a subsidiary of Fairfax Financial Ltd., where he was promoted from Associate Investment Analyst to Senior Investment Analyst. Mr. Cadwallader was part of the investment team at Hamblin Watsa Investment Counsel managing Fairfax Financials’ $22.0 billion in assets. In this capacity, his focus was primarily equity research and to some extent bond research with a focus on North America and to a lesser extent European stocks across a wide range of industries providing in depth analyses and recommendations.industries. He was also involved in a number of corporate debt restructurings. From 1998 to 2000, Mr. Cadwallader ran his own information technology consulting firm. The firm placed consultants with companies to develop application software and he personally managed numerous Y2K projects. From 1990 to January 1998, Mr. Cadwallader worked for CIBC,currently serves as a large Canadian bank. Mr. Cadwallader held positions as Managerdirector of Communications Services, Manager of Communications Software and Acting Director of Communications. Mr.Cadwallader began his career at Xerox holding various positions in information technology until 1990.Orbit International, Corp. that trades on the OTC market.
Mr. Cadwallader’s qualifications to serve on our Board of Directors include, among other skills and qualifications,amongst others, his extensive experience as an investor in public companies, including technology related companies, and his extensive financial analyst background.
Thomas Lanni was appointed to the Board, and to serve as President and Chief Executive Officer of the Company, on August 15, 2011. Mr. Lanni joined the Company in 1994 as General Manager for the ChargeSource Division. In February 2004, he became Vice President and Chief Technology Officer. Mr. Lanni has more than 30 years experience in the technology of power systems. From 1992 to 1994, he was President of Power Conversion Technologies, Inc. (“PCTI”), a company that provides advanced power electronics solutions to military and commercial industrial customers. From 1987 to 1992, he was Vice President of Engineering at Bruno New York Industries, Inc., a military weaponry specialist firm. From 1982 to 1987, he was Engineering Group Leader at Aerospace Avionics, Inc., a company whose various manufacturing activities are carried out through its Aerospace, Specialty Engineering, Medical and Detection divisions.
Mr. Lanni’s qualifications to serve on our Board of Directors include, amongst others, his extensive experience and history with the company, his management experience and his engineering background especially in the field of power systems.
Richard LeBuhnhas served since June 2006 as Senior Vice President atof Broadwood Capital, Inc., a private investment company that beneficially owns more than 5%approximately 22.9% of our outstanding common stock.stock as of the record date for the Annual Meeting. Since April 2014, Mr. LeBuhn has served as director on the board of Asterias Biotherapeutics, Inc. Previously, Mr. LeBuhn was a Principal atof Broadfield Capital Management, LLC, ana private investment advisory services firm, from May 2005 to June 2006, and a Vice President atof Derchin Management, another management servicesa private investment firm, from July 2002 to May 2005. Earlier in his career, Mr. LeBuhn founded and was Managing Member of Triple Eight Capital, LLC, an investment analysis and financial advisory firm, was Managing Director of Craig Drill Capital, Inc., a private investment firm, and served as an operating business manager for Chubb and Son, Inc., the property and casualty insurance division of The Chubb Corporation. Mr. LeBuhn holds a B.A.graduated from St. Lawrence University and anwith a BA in Economics in 1988. He received a MBA in Finance with Distinction from Columbia University Graduate School of Business.
Mr. LeBuhn’s qualifications to serve on our Board of Directors include, among other skills and qualifications,amongst others, his extensive experience as an investor in public companies, including technology related companies,
Michael MulroyLevin was appointed to the Board on March 15, 2011 and served as the Chairman of the Board from March 15, 2011 until July 28, 2012. Mr. Levin is an independent private investor and advisor with substantial expertise in corporate governance, business strategy, and corporate finance, and with significant experience working with U.S. public companies as a finance executive and independent management consultant. In addition to his private investment activities, he assists portfolio managers in turning around underperforming companies using shareholder activist strategies. Since 2006, Mr. Levin has served as Senior Vice President, Chief Financial Officer, General Counsel of Questcor Pharmaceuticals (NASDAQ:QCOR) since January 2011. From 2003 to 2011, Mr. Mulroy was employed by the law firm of Stradling Yocca Carlson & Rauth, wherea financial executive for several entrepreneurial ventures, including ventures in alternative energy and medical diagnostics. Previously, he served as a partnerfinance executive at Nicor, a natural gas utility, from 2004. At Stradling Yocca Carlson2003 to 2006. Mr. Levin was the Chief Risk and Credit Officer of CNH, a farm and construction equipment manufacturer, from 2002 to 2003. Prior to his work as a corporate finance executive, Mr. Levin enjoyed an 18 year career as a management consultant specializing in corporate finance and risk management at Towers Watson, Deloitte & RauthTouche, Arthur Andersen, and BearingPoint. A native of Chicago, Mr. Mulroy represented QuestcorLevin holds a B.A. with General Honors in Economics and other publicly-traded companies. From 1997 to 2003, Mr. Mulroy was an investment banker at Merrill LynchPublic Policy and Citigroup. Mr. Mulroy earned his J.D. degreea M.A. in Economics and Quantitative Analysis, both from the University of California, Los Angeles and his B.A. (Economics) from the University of Chicago.
Mr. Mulroy’sLevin’s qualifications to serve on our Board of Directors include, among other skills and qualifications,amongst others, his extensive experience as an attorney and investment banker advising manyinvestor in public companies, in different industries at different points in their development, and his experience serving as the Chief Financial Officer and General Counsel of a publicly traded company.
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Mr. Silverman was appointed to the Board and as the Chairman of the Board on July 28, 2012. Mr. Silverman is currently the Chairman and CEO of privately held Advanced ICU Care, Inc., a technology enabled health care services company providing tele-ICU monitoring services to hospitals nationwide. From June 2012 through February 2014, Mr. Silverman served as a consultant and Board advisor for private equity investors regarding health care technology and health care services portfolio investments. From September 2009 through June 2012, Mr. Silverman was CEO of Marina Medical, Inc. where he achieved a successful exit for the privately held Company. Previously, Mr. Silverman served as President and CEO of Qualcomm-backed health care start-up LifeComm, and he has also served as COO of Corvel Corporation, a publicly traded national managed care services/technology company that generated seven consecutive years of revenue and earnings growth during his tenure. For eight years, from August 2000 through August 2008, Mr. Silverman also served as the President and CEO of Quality Systems, Inc., a publicly traded developer of medical and dental practice management and patient records software. During his tenure, the Company's revenue increased from an annualized run rate of approximately $35 million to an annualized revenue run rate of $250 million and an increase in the Company's market capitalization from approximately $45 million to approximately $1.2 billion. The Company was named to the Forbes 200 list of Best Small Companies during each year of his tenure. Mr. Silverman currently serves as a board member for STAAR (NASDAQ: STAA) as well as a variety of privately held health care companies. He earned a B.A. from Amherst College and an M.B.A. from Harvard Business School.
Mr. Silverman’s qualifications to serve on our Board of Directors include, amongst others, his extensive public company management experience and his experience serving as a director of another public company.
No nominee for director has any family relationship with any other nomineedirector or with any of the Company’s executive officers.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During the fiscal year ended January 31, 20112014 (“fiscal 2011”2014”), the Board met 17 times, 4 of which were meetings of the independent directors of the Board.25 times. Each of the Company’s directors attended at least 75 percent of (i) the total number of meetings of the Board and (ii) the total number of meetings of the committees on which he served, during the period for which he was a director or committee member during the Company’s last fiscal year. The Board has a policy that each member of the Board should make every reasonable effort to attend each annual meetingAnnual Meeting of shareholders,Shareholders, and all five of the Company’s then current directors were in attendance either in person or by telephone at the 2010 Annual Meeting of Shareholders.
The Board appointed Mr. Robert J. MajtelesSilverman as a director and Chairman of the Board in December 2008, a position he held until his resignation on January 10, 2011.July 2012. In his capacity as Chairman of the Board, Mr. Majteles consultedSilverman consults regularly with the President and Chief Executive Officer, and other members of management, wasis the principal liaison to the non-management directors, workedworks with the President and Chief Executive Officer in preparing the agenda for Board meetings and chairs the executive sessions of the Board. Upon Mr. Majteles’ resignation from the Board, Mr. Griffin was appointed Chairman of the Board. Mr. Griffin resigned as a director and Chairman of the Board on March 11, 2011 and Mr. Levin was appointed as a director and Chairman of the Board effective March 15, 2011.
IndependenceIndependence of Committee Members
The standing committees of the Board described below are each comprised of independent directors as defined by Rule 5605(a)(2) of the NASDAQ Listing Rules. However,While none of the Company’s securities are listed for trading on the NASDAQ stock market.
Board Leadership Structure and Role in Risk Oversight
There are currently fivesix members of the Board all of whom areBoard: one management director and five independent non-management directors. The Board has three standing committees: Auditthe audit committee (the “Audit Committee”), the compensation committee (the “Compensation Committee”), the nominating and Finance, Compensation, and Nominatingcorporate governance committee (the “Nominating and Corporate Governance.Governance Committee”). The Board also has a special finance committee (the “Special Finance Committee”), which was formed in January 2013. All of the standing Board committees are comprised solely of independent, non-management directors. The committee chairs set the agendas for their respective committees and report to the full Board on their work.
The Board has, as with prior years, chosen to separate the positions of principal executive officer and Chairman of the Board of Directors.Board. The Board of Directors believes that it is in the best interests of the Company’s shareholders to separate the two positions because combining both positions in the same individual may concentrate too much power in the hands of a single executive. Having an independent Chairman of the Board may helpalso better facilitate communications and relations between the Board and the Company’s officers.
Mr. Majteles,Silverman, an independent, non-management director, for mosthas held the position of fiscal 2011.Chairman of the Board since July 2012. Mr. MajtelesSilverman was electedappointed Chairman due to his extensive public and private company leadership skills and experience. Mr. Griffin was appointed Chairman of the Board on January 10, 2011 following Mr. Majteles’ resignation and Mr. Levin was appointed as a director and Chairman of the Board effective March 15, 2011.
The entire Board has an active role, as a whole and also at the committee level, in risk oversight of the Company. The Board regularly receives, reviews and discusses information regarding risks related to the Company’s results of operations, business, strategy, financial position and liquidity. Each of the Board’s committees also reviews the risks related to thatsuch Committee’s areas of responsibility and reports to the Board regarding such matters. The Audit and Finance Committee serves as the Board’s representative for the oversight of
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Audit and Finance Committee
The Audit and Finance Committee monitors the quality and integrity of the Company’s financial statements, internal controls, risk management and legal and regulatory compliance. In addition, the Audit and Finance Committee oversees the accounting and financial reporting processes and the audits of the Company’s financial statements, including monitoring the independence, qualifications and performance of the Company’s independent registered public accounting firm. In this capacity, the Audit and Finance CommitteeCommittee: (i) determines the compensation of, evaluates and, when appropriate, replaces the Company’s independent registered public accounting firm,firm; (ii) pre-approves all audit and permitted non-audit servicesservices; and (iii) reviews the scope and results of each fiscal year’s outside audit. The fiscal 2011year ended January 31, 2014 members of the Audit and Finance Committee were Messrs. Griffin,Levin, who chaired the committee, HultmanBorowiec, and Majteles.Mulroy. Mr. Mulroy resigned from the Board on August 25, 2014. The Board determined that the members of the Audit and Finance Committee during fiscal 2011year ended January 31, 2014 were independent as defined under Rule 10A-3(b) promulgated by the Securities and Exchange Commission (the “SEC”) and that Mr. HultmanMulroy was the an “audit committee financial expert” for purposes of the rules and regulations of the SEC.SEC until his resignation. Mr. Levin resumed the role of “audit committee financial expert” after Mr. Mulroy’s resignation. Additionally, the Board determined that each of Messrs. Griffin, HultmanLevin, Borowiec and MajtelesMulroy understood fundamental financial statements, including a balance sheet, income statement and cash flow statement, and met the other requirements for audit committee members prescribed by the NASDAQ Listing Rules. While none of the Company’s securities are listed for trading on the NASDAQ stock market and the company is therefore not required to meet the NASDAQ Listing Rules, the Board has elected to maintain the audit committee standards of the NASDAQ Listing Rules. The Audit and Finance Committee met five4 times during fiscal 2011.
Compensation Committee
The Compensation Committee assists the Board by discharging the Board’s responsibilities with respect to the compensation and benefits of the Company’s executive officers and directors. In this regard, the Compensation Committee evaluates and administers the Company’s compensation policies and programs. The Compensation Committee reviews and approves corporate goals and objectives relevant to the compensation of the CEO, evaluates the CEO’s performance and sets the CEO’s compensation level based on this evaluation. For other Company executives, the Compensation Committee reviews and approves corporate goals and objectives, evaluates, in consultation with the CEO as the Compensation Committee deems appropriate or necessary, executive performance and sets compensation levels. In addition to executive compensation, the Compensation Committee reviews and assists the Board in establishing compensation policies for directors and committees of the Board. The Compensation Committee also administers the Company’s incentive and equity-based compensation plans. TheDuring fiscal 2011 members ofyear ended January 31, 2014, the Compensation Committee werewas composed of Messrs. Hultman,Cadwallader, who chairs the committee, GriffinBorowiec and LeBuhn.
In accordance with its charter, the Compensation Committee has the sole authority, as it deems appropriate, to retain and/or replace as needed any compensation and benefits consultants and other outside experts or advisors as the Compensation Committee believes to be necessary, desirable or appropriate. The Compensation Committee did not use the services of any outside experts or advisors during fiscal 2011.year ended January 31, 2014. The Compensation Committee met eight7 times during fiscal 2011.year ended January 31, 2014.
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The Nominating and Corporate Governance Committee assists the Board in identifying, evaluating and recommending candidates for election to the Board and its Committees, including reviewing and evaluating the size, structure and composition of the Board and its Committees. The Nominating and Corporate Governance Committee’s corporate governance responsibilities include providing oversight for evaluating the Board and management, and developing, recommending and reassessing the Company’s corporate governance guidelines and overall corporate governance of the Company. TheDuring fiscal 2011 members ofyear ended January 31, 2014, the Nominating and Corporate Governance Committee werewas composed of Messrs. Majteles,LeBuhn, who chaired the committee, GriffinBorowiec and LeBuhn.Cadwallader. The Nominating and Corporate Governance Committee met twice5 times during fiscal 2011.
Special Finance Committee
In January 2013, the compositionBoard of Directors established the NominatingSpecial Finance Committee, comprised solely of directors determined by the Board to be disinterested from the Company’s major shareholders Elkhorn and Corporate Governance Committee changed suchBroadwood, and delegated to that committee the current membersauthority to negotiate, consider and determine whether or not to approve (i) any debt or equity financing transactions with Elkhorn and (ii) any agreements that might be entered into with or any legal actions that might be taken against Broadwood. For these purposes, a director would be deemed to be disinterested if he has no relationships with Elkhorn or Broadwood and has no financial interest (other than as a shareholder of the committee are Messrs. Cadwallader, LeBuhn and Borowiec. Mr. LeBuhn is currently the Chairman of the Nominating and Corporate Governance Committee.
Committee Charters
The Board has adopted written charters for the Audit and Finance Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, settingwhich set forth the roles and responsibilities of each committee.of these committees. Each of the committee charters is available on the Company’s website at www.comarco.com. Information provided on the Company’s website, however, does not form a part of this Proxy Statement.
CORPORATE GOVERNANCE
Director Independence
The Board has determined that, except for Mr. Inman,Lanni, each individual who served as a member of the Board during fiscal 2011year ended January 31, 2014 was an “independent director” within the meaning of Rule 5605(a)(2) of the NASDAQ Listing Rules. Mr. InmanLanni was not considered independent as he was employed by the Company as its President and Chief Executive Officer during fiscal 2011.year ended January 31, 2014. Each of the Company’s current directors and director nominees(excluding Mr. Lanni) are or will be independent directors within the meaning of Rule 5605(a)(2) of the NASDAQ Listing Rules. However,While none of the Company’s securities are listed for trading on the NASDAQ stock market.
Executive Sessions of Independent Directors
It is the policy of the Board that the Company’s independent directors meet separately without management directors at least twice each year, before or after regularly scheduled Board meetings, to discuss such matters as the independent directors consider appropriate. Messrs. Majteles and Griffin, former ChairmenThe Chairman of the Board presidedpresides at these meetings. During fiscal 2011,meetings of the Company’s independent directors met separately in executive session five times.
Shareholder and Interested Party Communications with the Board of Directors
Shareholders who desire to communicate with the Board or any director regarding any matter pertinent to the Company’s business or affairs may do so by writing to the Comarco Board of Directors, Comarco, Inc., 25541 Commercentre Drive, Suite 250, Lake Forest, CA 92630, marked to the attention of an individual director’s name or to the Chairman of the Board.
In addition, anyone who has a concern about the conduct of the Company or any of its officers or employees, or about the Company’s accounting, internal controls, disclosure controls and procedures, auditing,
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Shareholder Recommendations of Director Candidates
The Nominating and Corporate Governance Committee considers candidates for nomination to serve as directordirectors proposed by any shareholder of the Company. Any shareholder recommendation is forwarded to the Chairman of the Nominating and Corporate Governance Committee.
A shareholder must provide the following supporting information to recommend a candidate for nomination: name, age,name; age; business and residence addresses,addresses; principal occupation or employment,employment; the number of shares of the Company’s common stock held by the candidate,candidate; a resume of his or her business and educational background,background; the information that would be required under SEC rules in a proxy statement soliciting proxies for the election of such nominee as a directordirector; and a signed consent of the candidate to serve as a director, if nominated and elected. The Nominating and Corporate Governance Committee, after reviewing this information, will determine whether the candidate meets the qualifications for committee-recommended candidates, including the objectives for the composition of the Board as a whole. The Nominating and Corporate Governance Committee does not evaluate any candidate for nomination as director any differently because the candidate was recommended by a shareholder.
Evaluation of Director Candidates
The Nominating and Corporate Governance Committee encourages the selection of directors who will contribute to the Company’s overall corporate goals of technology leadership, effective execution, high customer satisfaction, superior employee working environment and creation and preservation of shareholder value.value and technology leadership. At a minimum, candidates recommended by the Nominating and Corporate Governance Committee must possess the highest personal and professional ethics, integrity and values, and be committed to representing the long-term interests of the Company’s shareholders.
The Board will solicit recommendations for nominees from persons that the Board believes are likely to be familiar with qualified candidates. These persons may include members of the Board, shareholders of the Company and management of the Company. The Board may also engage a professional search firm to assist in identifying qualified candidates. If a search firm is engaged, the Board shall set its fees and scope of engagement.
Comarco’s Corporate Governance Guidelines set forth criteria which the Nominating and Corporate Governance Committee apply when evaluating the suitability of individual candidates for election or re-election to the Board. These criteria include, among other things,amongst others, the candidate’s integrity, business acumen, experience, judgment, commitment, diligence, conflicts of interest and ability to act in the interests of all shareholders. Additionally, the Nominating and Corporate Governance Committee considers the backgrounds and qualifications of the directors, as a group, to provide a diversity of background, experience, knowledge and abilitiesability to assist the Board in fulfilling its duties. When determining whether to recommend a director for re-election, the Nominating and Corporate Governance Committee takes into account the director’s past attendance at, and participation in, meetings of the Board and its committees and contributions to their activities.
Code of Ethics
The Audit and Finance Committee has adopted a Code of Ethics for Senior Financial Officers to promote and provide for honest and ethical conduct by the Company’s Senior Financial Officers, as well as for full, fair, accurate and timely financial management and reporting. The Company’s Senior Financial Officers include the Chief Executive Officer Chief Financial Officer,and the Chief Accounting Officer or Controller, and Treasurer.Officer. The
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Transactions with Related Persons
Secured Loan Agreement with Elkhorn Partners.
On February 11, 2013, the Company and Elkhorn Partners Limited Partnership (“Elkhorn”), entered into a Secured Loan Agreement (the “Elkhorn Loan Agreement”) and a Stock Purchase Agreement (the “Elkhorn SPA”), and certain related agreements, which are described below (collectively, the “Elkhorn Agreements”). Pursuant to those Elkhorn Agreements, Elkhorn made a $1.5 million senior secured loan to the Company with a maturity date of November 30, 2014 and purchased a total of 6,250,000 shares of the Company’s common stock at a cash purchase price of $0.16 per share, generating an additional $1.0 million of cash for the Company. The average of the closing prices of the Company’s common stock in the over-the-counter market for the five trading days immediately preceding February 11, 2013 was $0.14 per share and, for the 29 trading days that began on January 2, 2013 and ended on February 8, 2013, was $0.158 per share. On February 11, 2013, the Company used approximately $2.1 million of the proceeds of $2.5 million from the Elkhorn Loan and the sale of the shares to Elkhorn to pay the entire principal amount of and all accrued interest on the Broadwood Loan. On June 3, 2014, the Company repaid the Elkhorn Loan Agreement in full.
The Elkhorn Loan, which was evidenced by a promissory note (the “Elkhorn Loan”), issued by the Company to Elkhorn, bore interest at 7% for the first 12 months of the Elkhorn Loan, increasing to 8.5% thereafter and continuing until the Elkhorn Loan was paid in full.
The Elkhorn Loan Agreement provided that if and to the extent the Company did not pay the Elkhorn Loan in full by its Maturity Date, then, Elkhorn would have had the right, at its option (but not the obligation), to convert the then unpaid balance of the Elkhorn Loan, in whole or in part, into shares of Company common stock at a conversion price of $0.25 per share. That conversion price was subject to possible adjustment on (i) certain sales of Company common stock at a price lower than $0.25 per share, (ii) stock splits of, stock dividends on and any reclassification of the Company’s outstanding shares, and (iii) certain mergers or reorganizations of the Company, as provided in Article III of the Elkhorn Loan Agreement.
Elkhorn Stock Purchase Agreement
Concurrently with the Company’s entry into the Elkhorn Loan Agreement, the Company and Elkhorn entered into the Elkhorn SPA Agreement. Pursuant to that Elkhorn SPA Agreement, the Company sold 6,250,000 shares of its common stock to Elkhorn at a price of $0.16 per share, resulting in an aggregate purchase price of $1.0 million.
BroadwoodSenior Secured Six Month Term Loan Agreement and Stock Purchase Agreement
The Company entered into a Senior Secured Six Month Term Loan Agreement dated July 27, 2012 (the “Broadwood Loan Agreement”) with Broadwood, a partnership managed by Broadwood Capital, Inc., the general partner of Broadwood. Broadwood is a significant shareholder of the Company.
Pursuant to that Broadwood Loan Agreement, Broadwood made a $2,000,000 senior secured six month loan (the “Broadwood Loan”) to the Company and to CWT, as co-borrower. The Broadwood Loan bore interest at 5% per annum, ranked senior in right of payment to all other indebtedness of the Company and was due and payable in full on January 28, 2013.
Stock Purchase Agreement and Stock Purchase Warrants
Concurrently with the execution of the Broadwood Loan Agreement, the Company and Broadwood entered into the Broadwood SPA. That agreement provided for the purchase by Broadwood of up to 3,000,000 shares of the Company’s common stock (the “Shares”), at a price of $1.00 per Share, subject to the following conditions: (i) during the six month term of the Broadwood Loan, the Company would use its best commercial efforts to raise at least $3.0 million from the sale of additional equity securities to other investors, which could include other shareholders of the Company, and (ii) the Company remained in compliance with its covenants under the Broadwood Loan Agreement. The Broadwood SPA provided that if, at any time between July 27, 2012 and July 27, 2013, the Company sold any shares of its common stock (or sells or issues securities that are convertible or exercisable into shares of common stock) at a price less than $1.00 per share, the Company would be required to issue outright to Broadwood, without additional consideration from it, a number of additional Shares (the “Make-Whole Shares”) sufficient to reduce the per share price paid by Broadwood for the total number of the Shares and Make-Whole Shares issued under the Broadwood SPA to that lower price.
As consideration for the Broadwood Loan and Broadwood’s entry into the Broadwood SPA, on July 27, 2012 the Company issued stock purchase warrants (the “Warrants”) to Broadwood entitling it to purchase up to a total of 1,704,546 shares of the Company’s common stock (the “Warrant Shares”), at a price of $1.00 per Warrant Share, at any time through July 2020.
On July 27, 2012, the Company also entered into a Warrant Commitment Letter, which provided that if the Company raised less than $3.0 million from sales of equity securities to other investors during the six month term of the Broadwood Loan, then Broadwood will receive an additional Warrant (the “Additional Warrant”) entitling it to purchase, also at a price of $1.00 per share, an amount of shares of the Company’s common stock to be determined based on a formula in the Warrant Commitment Letter, with such amount not to exceed 1,000,000 additional shares (the amount of such additional shares, “Additional Warrant Shares”). The exercise price is to be adjusted if the Company completed subsequent financings at less than the current exercise price as described below.
The Warrants, including the Additional Warrant, provide that if the Company sold shares of its common stock (or any securities that were convertible or exercisable into shares of Company common stock) at a price less than $1.00 per share, then, subject to certain exceptions (including grants of stock incentives and sales of shares to officers, employees or directors under the Company’s equity incentive plans and issuances of shares in business acquisitions), the exercise price of the Warrants, including the Additional Warrant, then outstanding would be reduced to that lower price and the number of Warrant Shares purchasable by Broadwood on exercise of the Warrants and the Additional Warrant will be proportionately increased. The Warrants and the Additional Warrant were accounted for as derivative liabilities resulting from the instruments’ price protection features.
The Warrants and the Additional Warrant (collectively, the “Broadwood Warrants”) also grant to Broadwood the right to require the Company (i) to register the Warrant Shares under the Securities Act of 1933, as amended (the “Securities Act”) for possible resale and (ii) to include the Warrant Shares in any registration statement that the Company may file to register, under the Securities Act, the sale of Company shares for cash.
The Company was informed by Broadwood on January 28, 2013, that it was Broadwood’s position that one or more of the conditions precedent to its obligation to purchase the Company’s shares pursuant to the Broadwood SPA had not been satisfied and, as a result, Broadwood would not consummate that purchase.
The Company’s position was that, contrary to Broadwood’s assertions, all of the conditions under the Broadwood SPA had been satisfied, and Broadwood’s refusal to purchase 3,000,000 shares of Company common stock, at the price of $1.00 per share, constituted a material breach by Broadwood of its obligations under the Broadwood SPA. As a result, as of the date of filing this report, the Company had not issued any Additional Warrant Shares to Broadwood and each party had reserved its rights under and with respect to the Broadwood SPA and the Broadwood Warrants.
On August 13, 2014, the Company and Broadwood entered into an Amendment and Release Agreement that resolves the disputes between the Company and Broadwood concerning the Stock and Warrant Documents and related matters. Pursuant to the Amendment and Release Agreement, the Company issued Broadwood a new stock purchase warrant (“New Warrant”) entitling it to purchase up to a total of 2,350,000 shares of the Company’s common stock, at a price of $0.16 per share, in exchange for cancellation of the Original Warrants and any obligation of the Company to issue the Additional Warrant. The New Warrant expires on July 27, 2020. In addition, the Company and Broadwood released each other from any and all claims concerning the Stock and Warrant Documents and related matters. The derivative liability associated with the Broadwood warrants was reversed on the cancellation date. The replacement warrants qualified for classification as equity and added to additional paid – in capital.
Related party relationships
Chad Giacopelli, the son-in-law of Mr. Lanni, our Chief Executive Officer, was employed by the Company during fiscal year ended January 31, 2014 through his separation as our IT Network Technician in September, 2013. Our Chief Executive Officer did not directly supervise Mr. Giacopelli nor was he involved in the determination of Mr. Giacopelli's compensation.
Policy on Related Person Transactions
Our Board of Directors has adopted a written policy and procedures for the review of any transaction, arrangement or relationship in which the Company was or is to be a participant and one of our executive officers, directors, director nominees or a 5 percent shareholder (or any member of the immediate family of any of the foregoing), or any entity in which persons listed above, either individually or in the aggregate, have a greater than 10 percent ownership interest, each of whom we refer to as a “related person,” has or will have a direct or indirect material interest. We refer to these transactions as “related person transactions.” The policy is administered by the Audit and Finance Committee.
The policy calls for any proposed related person transaction to be reviewed and approved by our Audit and Finance Committee. Whenever practicable, the Committee will review, and, in its discretion, may approve the related person transaction in advance, but the policy also permits the Committee to consider and ratify transactions that have already occurred, when necessary. Any related person transactions that are ongoing in nature will be reviewed annually. The Committee will review and consider such information regarding the related person transaction as it deems appropriate under the circumstances. The policy also requires Committee review and approval of (1) any charitable contribution to an organization in which a related person serves as a director or trustee or is actively engaged in fund-raising and (2) any proposed transaction in which a related person may participate that involves a corporate opportunity of potential value to the Company. The policy provides that certainde minimistransactions do not create a material direct or indirect interest on behalf of related parties and, therefore, are not covered under the policy.
The Audit and Finance Committee may approve a related person transaction only if the Committee determines that, under all of the circumstances, the transaction is in the best interest of the Company and its shareholders. If the Audit and Finance Committee determines not to approve or ratify a related person transaction, the transaction shall not be entered into or continued, as the case may be. No member of the Committee will participate in any review or determination with respect to a related person transaction if the Committee member or any of his or her immediate family members is the related person.
In January 2013, the Board of Directors established the Special Finance Committee, comprised solely of directors determined by the Board to be disinterested from Elkhorn and Broadwood, and delegated to that committee the authority to negotiate, consider and determine whether or not to approve (i) any debt or equity financing transactions with Elkhorn and (ii) any agreements that might be entered into with or any legal actions that might be taken against Broadwood. For these purposes, a director would be deemed to be disinterested if he has no relationships with Elkhorn or Broadwood and has no financial interest (other than as a shareholder of Comarco) in any transactions that might be entered into or consummated with Elkhorn or in any agreements that might be negotiated with or actions that might be taken against Broadwood.
Since February 1, 2009,2013, except as described above under the heading “Transactions with Related Persons,” the Company has not been a party to, and has no plans to be a party to, any transaction or series of transactions in which the amount involved exceeded or will exceed $120,000 and in which any related person had or will have a direct or indirect material interest.
Non-Employee Director Compensation
The annual cash retainer payable in fiscal year ended January 31, 2014 to our non-employee directors was $33,000 per year through December 2010 and, effective January 1, 2011, was changed to $16,500$7,800 per year. Additional annual retainers for the Chairman of the Board, Audit Committee Chairman, Compensation Committee Chairman and Nominating and Governance Chairman were $12,000, $6,000, $5,000$2,400, $1,200 and $5,000, respectively through December 2010. Effective January 1, 2011 the$1,200, respectively. The additional annual retainersretainer for the Chairman of the Board Audit Committeewas $14,400 from January 1, 2012 through July 31, 2012. Upon the appointment of Mr. Silverman as Chairman Compensation Committeeof the Board, effective July 28, 2012, the Chairman of the Board’s annual retainer increased to $148,200. The Chairman of the Board’s retainer increased because the Board terminated the former interim Chief Executive Officer and Nominatingappointed Mr. Lanni as the Chief Executive Officer, and Governancethe Board felt that greater oversight was needed during the transition. Effective May 1, 2013, the additional retainer paid to the Chairman wereof the Board was reduced to $6,000, $3,000, $2,500 and $2,500, respectively.$84,000. These cash retainers arewere paid monthly.monthly through December 2012 and were paid quarterly, in arrears, beginning on January 1, 2013. Non-employee directors who serve on, but do not chair, a committee of the Board are not paid any separate annual retainers for service on such committee. No separate meeting fees are paid for attendance at any Board or committee meetings. From time to time we may grant equity-based compensation to our non-employee directors, but we do not have any formal policy under which we do so.
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The following table details the cash retainers and fees, as well as equity compensation in the form of stock awards earned by our non-employee directors during fiscal 2011:
| Fees Earned or | Stock | |||||||||||
| Paid in Cash | Awards(1) | Total | ||||||||||
| Name | ($) | ($) | ($) | |||||||||
Gerald D. Griffin(2) | $ | 38,083 | $ | 47,000 | $ | 85,083 | ||||||
| Jeffrey R. Hultman | $ | 36,417 | $ | 47,000 | $ | 83,417 | ||||||
| Richard T. LeBuhn | $ | 31,625 | $ | 47,000 | $ | 78,625 | ||||||
Robert J. Majteles(3) | $ | 45,833 | $ | 47,000 | $ | 92,833 | ||||||
Name | Fees Earned or | Stock Awards(2) | Total | |||||||||
Paul Borowiec | $ | 7,800 | $ | 6,983 | $ | 14,783 | ||||||
Wayne G. Cadwallader | $ | 9,000 | $ | 7,856 | $ | 16,856 | ||||||
Richard T. LeBuhn | $ | 9,000 | $ | 15,669 | $ | 24,669 | ||||||
Michael R. Levin | $ | 10,200 | $ | 7,856 | $ | 18,056 | ||||||
Michael H. Mulroy | $ | 7,800 | $ | 6,983 | $ | 14,783 | ||||||
Louis E. Silverman | $ | 102,000 | $ | 24,250 | $ | 126,250 | ||||||
(1) | This column also represents fees earned or paid in cash and fees. On November 2, 2013, the Company approved a deferred compensation plan for its Chief Executive Officer and Board of Directors. As of January 31, 2014, no expense has been accrued under this deferred compensation plan as its goal was not achieved. The following represents amounts deferred as of January 31, 2014: |
Name | Amounts deferred under deferred | |||
Paul Borowiec | $ | 2,550 | ||
Wayne G. Cadwallader | $ | 2,550 | ||
Richard T. LeBuhn | $ | 2,550 | ||
Michael R. Levin | $ | 2,550 | ||
Michael H. Mulroy | $ | 2,550 | ||
Louis E. Silverman | $ | 30,000 | ||
(2) | This column represents the grant date fair value of | |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial ownership of the Company’s common stock as of May 31, 2011January 2, 2015 by:
● | each member of the Board; | ||
● | each of the Company’s executive officers named in the “Summary Compensation Table” included in the “Executive Compensation” section of this | ||
● | all of the Company’s directors and executive officers as a group; and | ||
● | each person or entity known to the Company that beneficially owns more than 5 percent of the Company’s common stock. |
Beneficial ownership is determined in accordance with the rules of the SEC. Unless otherwise indicated below, the address of each beneficial owner is c/o Comarco, Inc., 25541 Commercentre Drive, Suite 250, Lake Forest, California, 92630. Unless otherwise indicated below, the Company believes that each of the persons listed in the table (subject to applicable community property laws) has the sole power to vote and to dispose of the shares listed opposite the shareholder’s name.
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| Number of | ||||||||
| Shares | ||||||||
| Beneficially | Percent of | |||||||
Name and Address of Beneficial Owner | Owned | Class | ||||||
| Paul Borowiec | 247,959 | (1) | 3.4 | % | ||||
| Wayne G. Cadwallader | — | * | ||||||
| Winston E. Hickman | 30,000 | (2) | * | |||||
| Jeffrey R. Hultman | 75,825 | (2) | 1.0 | % | ||||
| Samuel M. Inman, III | 120,000 | (2) | 1.5 | % | ||||
| Thomas W. Lanni | 70,000 | (2) | * | |||||
| Richard T. LeBuhn | 39,325 | (2) | * | |||||
| Michael R. Levin | 11,000 | * | ||||||
| Michael H. Mulroy | — | * | ||||||
| All Directors, Director Nominees and Executive Officers as a group (12 persons) | 718,075 | (2) | 9.2 | % | ||||
| T. Rowe Price Associates, Inc. T. Rowe Price Small-Cap Value Fund, Inc. 100 East Pratt Street Baltimore, MD 21202 | 674,223 | (3) | 9.2 | % | ||||
| Dimensional Fund Advisors LP Palisades West, Building One 6300 Bee Cave Road Austin, TX 78476 | 468,455 | (4) | 6.4 | % | ||||
Broadwood Partners, L.P. Broadwood Capital, Inc. Neal Bradsher 724 Fifth Avenue, 9th Floor New York, New York 10019 | 1,564,136 | (5) | 21.3 | % | ||||
| Elkhorn Partners Limited Partnership 222 Skyline Drive Elkhorn, NE 68022 | 690,722 | (6) | 9.4 | % | ||||
Number of | ||||||||
Shares | ||||||||
Beneficially | Percent of | |||||||
Name and Address of Beneficial Owner | Owned | Class | ||||||
Paul Borowiec | 467,520 | (1) | 3.2 | % | ||||
Wayne G. Cadwallader(6) | 187,500 | (2), (3) | 1.3 | % | ||||
Thomas W. Lanni(6) | 370,470 | (2), (3) | 2.5 | % | ||||
Richard T. LeBuhn(6) | 234,801 | (2), (3) | 1.6 | % | ||||
Michael R. Levin | 144,099 | (2), (3) | 1.0 | % | ||||
Louis E. Silverman | 325,000 | (2), (3) | 2.2 | % | ||||
All Directors, Director Nominees and Executive Officers as a group (7 persons) | 1,729,390 | (2) | 11.8 | % | ||||
Broadwood Partners, L.P. | ||||||||
Broadwood Capital, Inc. | ||||||||
Neal Bradsher | ||||||||
724 Fifth Avenue, 9thFloor | ||||||||
New York, New York 10019 | 3,898,636 | (4) | 22.9 | % | ||||
Elkhorn Partners Limited Partnership | ||||||||
222 Skyline Drive | ||||||||
Elkhorn, NE 68022 | 6,795,872 | (5) | 46.3 | % | ||||
* | ||
Indicates less than 1 percent of the outstanding shares of common stock. |
(1) | Mr. Borowiec holds an indirect beneficial ownership in 352,520 of these shares and has a pecuniary interest in |
(2) | Includes shares which the person has the right to acquire within 60 days of |
(3) | Includes shares which are subject to the |
(4) | Includes an aggregate of 2,350,000 shares | |
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| January 2, 2015. Based on a Schedule 13D (Amendment |
(5) | Based on a |
(6) | Each of Messrs. Cadwallader, Lanni and LeBuhn entered into a Stock Purchase Agreement with the Company during the first quarter of fiscal year ended January 31,2014 and each purchased 62,500 shares at a purchase price of $0.16 per share. |
SECTIONSection 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEBeneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the rules issued thereunder, the Company’s executive officers, directors and persons that own more than 10 percent of the Company’s common stock are required to file with the SEC reports of ownership and changes in ownership of common stock and furnish the Company copies of all such reports.
The Company believes that during fiscal 2011,year ended January 31,2014, its executive officers, directors and persons that owned more than 10 percent of the Company’s common stock complied with the Section 16(a) reporting requirements on a timely basis, based on the reports received by the Company or written certifications received by the Company from its executive officers and directors.
INFORMATION CONCERNING EXECUTIVE OFFICERS
The following table sets forth information as of May 31, 2011January 9, 2015 concerning the executive officers of the Company (other than Mr. Lanni, whose biographical information appears in the disclosure under the Directors section above) and its principal subsidiary, Comarco Wireless Technologies, Inc.
Name | Age | Position | ||||
Janet Nguyen Gutkin | ||||||
42 | ||||||
Chief Accounting Officer and |
JanetFrederik TorstenssonNguyenGutkinjoined the Company as Vice President of Sales and Marketing in July 2003. On April 5, 2011 Mr. Torstensson was also appointed interim President and Chief Executive Officer. Mr. Torstensson has more thanover 15 years of experience in international sales and marketing, product management, and executive management. From August 2002 to July 2003, he was Vice President of International Sales and Marketing at Kyocera Wireless. From 1999 to August 2003, he was General Manager for North America and Executive Vice President of Sales and Marketing for OZ Communication, a mobile applications development company. Prior to this position, from 1996 to 1999, he was the Director of Business Development with Ericsson.
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The following table sets forth the total compensation earned by each of the three Named Executive Officers of the Company for fiscal 2011years ended January 31,2014 and 2010.2013. The amounts shown include compensation for services in all capacities that were provided to the Company including any amounts which may have been deferred.
| Non-Equity | ||||||||||||||||||||||||
| Option | Incentive Plan | All Other | ||||||||||||||||||||||
| Name and | Salary | Awards | Compensation(1) | Compensation(2) | Total | |||||||||||||||||||
| Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||
Samuel M. Inman, III(3) | 2011 | $ | 390,000 | $ | — | $ | 85,375 | $ | 54,447 | $ | 529,822 | |||||||||||||
| President & Chief Executive Officer | 2010 | $ | 480,000 | $ | — | $ | — | $ | 38,341 | $ | 518,341 | |||||||||||||
Winston E. Hickman(4) | 2011 | $ | 285,000 | $ | — | $ | 52,500 | $ | 53,264 | $ | 390,764 | |||||||||||||
| Vice President & Chief Financial Officer | 2010 | $ | 360,000 | $ | — | $ | — | $ | 38,120 | $ | 398,120 | |||||||||||||
| Thomas W. Lanni | 2011 | $ | 208,760 | $ | — | $ | 31,500 | $ | 45,692 | $ | 285,952 | |||||||||||||
| Vice President & Chief Technology Officer Comarco Wireless Technologies, Inc. | 2010 | $ | 235,000 | $ | — | $ | — | $ | 36,121 | $ | 271,121 | |||||||||||||
Summary Compensation Table
Equity | Vacation | All Other | |||||||||||||||||||
Name and | Salary(4) | Awards(1) | Payouts | Compensation(2) | Total | ||||||||||||||||
Principal Position | Year | ($) | ($) | ($) | ($) | ($) | |||||||||||||||
Thomas W. Lanni | 2014 | $ | 202,583 | $ | 4,000 | $ | — | $ | 58,718 | $ | 265,301 | ||||||||||
President & Chief Executive Officer. | 2013 | $ | 230,006 | $ | 12,800 | $ | 8,416 | $ | 46,861 | $ | 298,083 | ||||||||||
Alisha K. Charlton(3) | 2014 | $ | 152,583 | $ | — | $ | 15,035 | $ | 9,893 | $ | 177,511 | ||||||||||
Vice President & Chief Accounting Officer | 2013 | $ | 176,613 | $ | 6,400 | $ | — | $ | 10,215 | $ | 193,228 | ||||||||||
Donald L, McKeefery(3) | 2014 | $ | 114,568 | $ | — | $ | 18,344 | $ | 28,637 | $ | 161,549 | ||||||||||
Vice President & Chief Operating Officer. | 2013 | $ | 185,016 | $ | 6,400 | $ | 10,674 | $ | 36,405 | $ | 238,495 | ||||||||||
(1) | ||
This column represents |
(2) | The amounts reported above under the heading “All Other Compensation” consist of the |
| All Other Compensation ($) | ||||||||||||||||||||||||||||
| Tax | ||||||||||||||||||||||||||||
| Auto | Insurance | Medical | Gross- | 401(k) | ||||||||||||||||||||||||
| Name | Year | Allowance | Premiums | Expenses | Ups | Contributions | Total | |||||||||||||||||||||
| Samuel M. Inman, III | 2011 | $ | 8,000 | $ | 38,947 | $ | 5,000 | $ | 2,500 | $ | — | $ | 54,447 | |||||||||||||||
| 2010 | $ | — | $ | 30,841 | $ | 5,000 | $ | 2,500 | $ | — | $ | 38,341 | ||||||||||||||||
| Winston E. Hickman | 2011 | $ | 6,000 | $ | 27,514 | $ | 5,000 | $ | 2,500 | $ | 12,250 | $ | 53,264 | |||||||||||||||
| 2010 | $ | — | $ | 21,892 | $ | 2,768 | $ | 1,210 | $ | 12,250 | $ | 38,120 | ||||||||||||||||
| Thomas W. Lanni | 2011 | $ | — | $ | 38,192 | $ | 5,000 | $ | 2,500 | $ | — | $ | 45,692 | |||||||||||||||
| 2010 | $ | — | $ | 29,876 | $ | 3,862 | $ | 1,931 | $ | 452 | $ | 36,121 | ||||||||||||||||
All Other Compensation ($) | ||||||||||||||
Name | Year | Insurance Premiums | 401(k) Contributions | Total | ||||||||||
Thomas W. Lanni | 2014 | $ | 58,718 | $ | — | $ | 58,718 | |||||||
2013 | $ | 46,861 | $ | — | $ | 46,861 | ||||||||
Alisha K. Charlton(3) | 2014 | $ | 1,172 | $ | 8,721 | $ | 9,893 | |||||||
2013 | $ | 1,724 | $ | 8,491 | $ | 10,215 | ||||||||
Donald. L. McKeefery(3) | 2014 | $ | 27,237 | $ | 1,400 | $ | 28,637 | |||||||
2013 | $ | 34,519 | $ | 1,886 | $ | 36,405 | ||||||||
(3) | On October 4, 2013, Donald L. McKeefery submitted to the Company his resignation as Chief Operating Officer to be effective October 4, 2013.On December 31, 2013, Alisha K. Charlton submitted to the Company her resignation as Vice President and Chief Accounting Officer effective as of January 24, 2014. |
(4) | This column also represents salary earned. On November 2, 2013, the Company approved a deferred compensation plan for its Chief Executive |
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The following table sets forth certain information with respect to grants of plan-based awards to the Named Executive Officers.
| Option Awards | ||||||||||||||||
| Number of Securities Underlying | ||||||||||||||||
| Unexercised Options | Option | |||||||||||||||
| Exercisable | Unexercisable | Exercise Price | Option Expiration | |||||||||||||
Name | (#) | (#) | ($) | Date | ||||||||||||
Samuel M. Inman, III(1) | 15,000 | — | $ | 6.19 | 7/16/2017 | |||||||||||
| 105,000 | 245,000 | $ | 1.09 | 11/11/2018 | ||||||||||||
Winston E. Hickman(1) | 30,000 | 70,000 | (2) | $ | 1.09 | 11/11/2018 | ||||||||||
| Thomas W. Lanni | 10,000 | — | $ | 11.600 | 11/28/2011 | |||||||||||
| 10,000 | — | $ | 9.890 | 2/3/2014 | ||||||||||||
| 20,000 | — | $ | 10.430 | 6/19/2016 | ||||||||||||
| 30,000 | 70,000 | (2) | $ | 1.09 | 11/11/2018 | |||||||||||
Option Awards | |||||||||||||
Number of Securities Underlying Unexercised Options | Option | ||||||||||||
Name | Exercisable (#) | Unexercisable (#) | Exercise Price ($) | Option Expiration Date | |||||||||
Thomas W. Lanni | 10,000 | — | $ | 9.89 | 02/03/2014 | ||||||||
| 20,000 | — | $ | 10.43 | 6/19/2016 | |||||||||
| 60,000 | 40,000 | (1) | $ | 1.09 | 11/11/2018 | ||||||||
Alisha K. Charlton(2) | 10,000 | — | $ | 8.38 | 02/04/2015 | ||||||||
| 11,100 | 7,400 | (1) | $ | 1.20 | 12/15/2018 | ||||||||
(1) | ||
|
(2) | On December 31, 2013, Alisha K. Charlton submitted to the Company her resignation as Vice President and |
Potential Payments Upon Change of Control
The Company and Mr. Lanni are parties to the terms of the Amended and Restated Severance Compensation Agreement, dated as of June 11, 2007, between the Company and Mr. Lanni,which provide that, if, within 24 months following a “Change in Control” (as defined in the agreement)such agreements), Mr. Lannihe is terminated by us other than for “Cause” (as defined in the agreement)such agreements) or ceases to be employed by us for reasons other than because of death, disability, retirement or Cause, or Mr. Lannihe terminates his employment with us for “Good Reason” (as defined in the agreement)such agreements), then he is entitled to receive a lump sum cash payment equal to the sum of his annual base salary plus his annual incentive compensation bonus that would be payable assuming 100 percent satisfaction of all performance goals thereunder. Assuming,
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As a result of the Company’s sale of the 6,250,000 shares of common stock to Elkhorn Partners Limited Partnership (“Elkhorn”), subsequent to our 2013 fiscal year end, discussed under the heading “Transactions with Related Persons” earlier in this agreement.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of January 31, 2014 with Mr. Lanni on June 11, 2007. The Company has not entered into a separate employment agreement with Mr. Lanni.
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Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options or Vesting of Restricted Stock Units | Weighted-Average Exercise Price of Outstanding Options and Grant Price of Outstanding Restricted Stock Units | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in the first column) | |||||||||
Equity compensation plans approved by security holders | 638,500 | $ | 1.22 | 35,244 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 638,500 | $ | 1.22 | 35,244 | ||||||||
The Company’s Compensation Committee and Board of Directors have reviewed the Company’s executive and employee compensation practices to analyze whether or not they create improper incentives that would result in a material risk to the Company. Based on this review and analysis, the Compensation Committee and the Board of Directors has determined that none of the Company’s compensation practices for its executive officers or employees is reasonably likely to have a material adverse effect on the Company.
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ADVISORY VOTE TO APPROVE THE COMPENSATION OF 2011 EQUITY INCENTIVE PLAN
Pursuant to shareholder approval, to adopt the 2011 Equity Incentive Plan (the “2011 Plan”) to allow for the issuanceSection 14A of the Authorized Shares (as defined below)Exchange Act, we are asking our shareholders to vote to approve, on a nonbinding, advisory basis, the employees, consultantscompensation of our named executive officers, commonly referred to as the “say-on-pay” vote. In accordance with the Exchange Act requirements, we are providing our shareholders with an opportunity to express their views on our named executive officers’ compensation. Although this advisory vote is nonbinding, our Board of Directors and directorsCompensation Committee will review and consider the voting results when making future decisions regarding our named executive officer compensation and related executive compensation programs.
We encourage shareholders to read the “Executive Compensation” section in this proxy statement, including the compensation tables and the related narrative disclosure, which describes the structure and amounts of the Company.compensation of our named executive officers in fiscal year ended January 31, 2014. The Companycompensation of our named executive officers is requestingdesigned to enable us to attract and retain talented and experienced executives to lead us successfully in a competitive environment. The Compensation Committee and our Board of Directors believe that our executive compensation strikes the appropriate balance between utilizing responsible, measured pay practices and effectively incentivizing our named executive officers to dedicate themselves fully to value creation for our shareholders.
Accordingly, we ask our shareholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the shareholders approve, on an advisory basis, the adoptioncompensation of our named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the 2011 Plan. The total number of new shares of common stock being made available for issuance under the 2011 Plan will represent approximately 10.2% of shares of common stock outstanding as of the record date. Additional shares may be issued under the 2011 Plan as discussed below.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR FISCAL 2012
The Audit Committee has appointed Squar, Milner, Peterson, Miranda & Williamson LLP (“Squar Milner”) as the Company’s independent registered public accounting firm for the fiscal year ending January 31, 20122015 (“fiscal 2012”2015”), and has requested the Board to submit this appointment for ratification by our shareholders at the Annual Meeting. The Audit Committee of the Board of Directors unanimously approved the engagement of Squar Milner.
A representative of Squar Milner Peterson, Miranda & Williamson LLP is expected to be present at the Annual Meeting, will have the opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions from shareholders.
In the event that the shareholders do not ratify the appointment of Squar Milner Peterson, Miranda & Williamson LLP as the Company’s independent registered public accounting firm for fiscal 2012,year ending January 31, 2015, the appointment will be reconsidered by the Audit Committee. Even if the appointment is ratified by the shareholders, the Audit Committee in its discretion may dismiss Squar Milner, Peterson, Miranda & Williamson LLP as the Company’s independent registered public accounting firm, and appoint a different independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of the Company and its shareholders.
THE BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
SQUAR, MILNER, PETERSON, MIRANDA & WILLIAMSON LLP AS THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FORFISCAL 2012.YEAR ENDING JANUARY 31, 2015
Audit Fees
The aggregate fees incurred and paidpayable to BDO USA, LLPSquar Milner for professional services rendered in connection with the audit and quarterly reviews of the Company’s consolidated financial statements during fiscal 2011years ended January 31, 2014 and fiscal 20102013 were approximately $164,000$82,000 and $175,000, respectively.
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During fiscal year ended January 31, 2013 we paid Squar Milner approximately $3,000 in connection with our S-8 filing. No audit-related feessimilar expenses were paid to BDO USA, LLP forincurred during fiscal 2011 or fiscal 2010. year ended January 31, 2014.
Tax Fees
In fiscal 2011years ended January 31, 2014 and 2010, we engaged Squar, Milner, Peterson, Miranda & Williamson LLP to assist us with Sarbanes-Oxley internal control testing and incurred fees during these years of approximately $52,000 and $56,000, respectively.
All Other Fees
We paid Squar Milner Peterson, Miranda & Williamson LLPapproximately $11,000 each year for the audit of our Savings and Retirement Plan in fiscal 2011.
Pre-Approval Policies and Procedures
It is the Company’s policy that all audit and non-audit services to be performed by the Company’s independent registered public accounting firm be approved in advance by the Audit Committee. All of the services provided in fiscal 2011years ended January 31, 2014 and 20102013 were pre-approved.
Notwithstanding anything to the contrary contained in any of our previous or futurefilings under the Securities Act of 1933, as amended, or the SecuritiesExchange Act of 1934, as amended, that might incorporate this Proxy Statement proxy statementor future filings with the SEC by reference, in whole or in part, the Audit and Finance Committee Report set forth below shall not be deemed to be “solicitingmaterial” or “filed” with the SEC, nor shall such information be incorporatedby reference into any such filing.filing except to the extent that the Company specifically incorporates it by reference.
The Board has determined that each member of the Audit and Finance Committee of the Board (the “Audit Committee”) is an “independent director,” as defined under the NASDAQ Listing Rules and Rule 10A-3(b) of the Exchange Act. The Board has determined that Mr. Levin is an “audit committee financial expert,” as defined in Item 407(d)(5)(ii) of Regulation S-K. In accordance with the written charter of the Audit and Finance Committee adopted by the Board, the Audit and Finance Committee assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Company.
It is not the duty or responsibility of the Audit and Finance Committee to conduct auditing or accounting reviews or procedures. In performing their oversight responsibility, members of the Audit and Finance Committee rely, without independent verification, on the information provided to them, and on the representations made by, management and the independent accountants. Accordingly, the Audit and Finance Committee’s oversight does not provide an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit and Finance Committee’s considerations and discussions do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards or that the financial statements are presented in accordance with generally accepted accounting principles.
Management is responsible for (a)for: (i) the preparation, presentation and integrity of the Company’s financial statements; (b)(ii) accounting and financial reporting principles; and (c)(iii) the Company’s internal control over financial reporting and disclosure controls and procedures designed to promote compliance with accounting standards and applicable laws and regulations.
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1. The Audit and Finance Committee has reviewed and discussed the audited financial statements relating to the fiscal year ended January 31, 20112014 with BDO USA, LLP;
2. The Audit Committee reviewed and Finance Committee has discussed the audited 2014 financial statements, including the quality of the company’s accounting principles, with BDO USA, LLP,management and the Company’scompany’s independent registered public accounting firm, Squar Milner. The Audit Committee also discussed with Squar Milner the matters required to be discussed by the Statement on Auditing StandardsStandard No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted16, “Communications with Audit Committees,” issued by the Public Company Accounting Oversight Board in Rule 3200T.
3. The Audit and Finance Committee has received written disclosures and a letter from BDO USA, LLP,Squar Milner required by the applicable rules of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with BDO USA, LLPSquar Milner their independence.
4. Based on the review and discussions referred to above, the Audit and Finance Committee recommended to the Board, and the Board has approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2011.
The foregoing report is provided by the undersigned members of the Audit and Finance Committee.
THE AUDIT | |||||
Michael R. Levin, Chairman | |||||
Paul Borowiec, Member | |||||
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2015
ANNUAL MEETING
The Bylaws set forth certain procedures for shareholder nominations of directors and shareholder proposals for other business to be conducted at an annual meeting of shareholders, which are referred to herein as the Nomination Procedures and Proposal Procedures, respectively.
Nominations for Directors at the 20122015 Annual Meeting
No person will be eligible for election as a director unless nominated in accordance with the provisions of the Nomination Procedures. Nominations of persons for election to the Board shall be made only at a meeting of shareholders and only (a) by or at the direction of the Board or any duly authorized committee thereof or (b) by any shareholder of the Company who is a holder of record on the record date for such meeting and complies with the Nomination Procedures.
Nominations by shareholders must be made in writing to the Secretary of the Company and must comply with all of the applicable requirements contained in the Bylaws (as the same may be amended and/or restated from time to time). Under the Nomination Procedures currently in effect, to be timely, such notice must be received not less than 45 days nor more than 75 days prior to the one-year anniversary of the date on which the Company first mailed its proxy materials for the immediately preceding year’s annual meetingAnnual Meeting of shareholders;Shareholders; provided, however, that if the annual meetingAnnual Meeting is convened more than 30 days before, or delayed by more than 30 days after, the one-year anniversary of the immediately preceding year’s annual meetingAnnual Meeting of shareholders,Shareholders, notice by the shareholder, to be timely, must be received by the Corporate Secretary at the above address not later than the close of business on the later of (i) the 90th day before such annual meeting or (ii) the 10th day following the day on which the date of such meeting is first publicly announced. Therefore, in order to be timely for the 2012 annual meeting,2015 Annual Meeting of Shareholders, a shareholder’s notice must be delivered to or mailed and received at our principal executive offices not earlier than March 24, 2012October 31, 2015 and not later than April 23, 2012,November 30, 2015, assuming that the 2012 annual meeting2015 Annual Meeting of Shareholders is held within 30 days of July 21, 2012.January 28, 2016. If you would like to submit a nomination please direct your request in writing to: Comarco, Inc., Attn: Corporate Secretary, 25541 Commercentre Drive, Suite 250, Lake Forest, CA 92630.
Shareholder Proposals for the 20122015 Annual Meeting
Under the terms of the Proposal Procedures, to be properly brought at an annual meeting, business must be (a)brought (i) by or at the direction of the Board or (b)(ii) by any shareholder who is a holder of record on the record date of such meeting and who complies with the Proposal Procedures.
If you would like the Company to consider including a proposal in the Company’s proxy materials relating to the annual meeting2015Annual Meeting of shareholders to be held in 2012,Shareholders, your written proposal must be received no later than February 8, 2012. If such proposal is in compliance with all of the requirements of Rule 14a-8 under the Exchange Act, weAct. Proper proposals will include itbe included in the proxy statement and set it forth on the form of proxy issued for such annual meetingAnnual Meeting of shareholders.Shareholders. You should direct any such shareholder proposals to: Comarco, Inc., Attn: Corporate Secretary, 25541 Commercentre Drive, Suite 250, Lake Forest, CA 92630.
Shareholder proposals must be made in writing and must comply with all of the applicable requirements contained in Bylaws (as the same may be amended and/or restated from time to time). In order to comply with the Proposal Procedures currently in effect, to be timely, such notice must be received not less than 45 days nor more than 75 days prior to the one-year anniversary of the date on which the Company first mailed its proxy materials for the immediately preceding year’s annual meetingAnnual Meeting of shareholders;Shareholders; provided, however, that if the annual meetingAnnual Meeting of Shareholders is convened more than 30 days before or delayed by more than 30 days after the one-year anniversary of the immediately preceding year’s annual meetingAnnual Meeting of shareholders,Shareholders, notice by the shareholder, to be timely, must be received by the Corporate Secretary at the above address not later than the close of business on the later of (i) the 90th day before such annual meeting or (ii) the 10th day following the day on which the date of such meeting is first publicly announced. Therefore, in order to be timely for the 2012 annual meeting,2015 Annual Meeting of Shareholders, a shareholder’s notice must be delivered to or mailed and received at our principal executive offices not earlier than March 24, 2012October 31, 2015 and not later than April 23, 2012,November 30, 2015, assuming that the 2011 annual meeting2015 Annual Meeting of Shareholders is held within 30 days of July 21, 2011.January 28, 2016. If you would like to submit a nominationproposal, or would like a copy of the requirements for nominations by shareholdersshareholder proposals contained in
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OTHER MATTERS
The Board of the Company does not know of any matter to be acted upon at the meeting other than the mattersthose described above.herein. If other matters properly come before the meeting, the holders of the proxies will vote on such matters in accordance with their judgment.
The Company’s 2011 Annual Report to Shareholders is enclosed withon Form 10-K for its fiscal year ended January 31, 2014 accompanies this Proxy Statement.
Upon request and without charge, the Company will send you a copy of our Annual Report on Form 10-K for the fiscal year ended January 31, 2011,2014, including the financial statements and the financial statement schedules required to be filed with the SEC pursuant to Rule 13a-1 of the Securities Exchange Act.Act of 1934, as amended. You may also obtainrequest copies of exhibits to the Form 10-K, but the Company will charge a reasonable fee to shareholders requesting such exhibits. You should direct your request in writing to: Comarco, Inc., Attn: Corporate Secretary, 25541 Commercentre Drive, Suite 250, Lake Forest, CA 92630.
IN ORDER TO AVOID ADDED EXPENSE OR ADDITIONAL SOLICITATION OF PROXIES, YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURNSUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AS SOON AS POSSIBLE BYINTERNET, TELEPHONE OR MAIL PURSUANT TO THE INSTRUCTIONS DESCRIBED IN THE ENCLOSED PROXY INCARD.
BY ORDER OF THE ENVELOPE PROVIDED, TO WHICH NO POSTAGE NEED BE AFFIXED.
/s/ Janet Nguyen Gutkin
Janet Nguyen Gutkin, Secretary
Lake Forest, CaliforniaJune 10, 2011
January 9, 2015
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