Exhibit 99.1
The following unaudited pro forma condensed consolidated financial statements present the historical financial statements of Comarco, Inc., (the “Company”) with adjustments relating to the sale, pursuant to the Asset Purchase Agreement, of the Company’s call box business which was completed on July 10, 2008. The unaudited pro forma condensed consolidated balance sheet as of April 30, 2008 is presented as if the sale had been completed on April 30, 2008. The unaudited pro forma condensed consolidated statements of operations for the three month period ended April 30, 2008 and the year ended January 31, 2008 are presented as though the sale had been completed on February 1, 2007.
These unaudited pro forma condensed consolidated financial statements should be read in conjunction with our historical consolidated financial statements and accompanying notes previously filed in our Form 10-K for the year ended January 31, 2008 and Form 10-Q for the three month period ended April 30, 2008. The unaudited pro forma consolidated financial statements are not necessarily indicative of the results of operations or financial position of the Company that would have been reported had the sale been completed as of the dates presented, and are not necessarily representative of the future consolidated results of operations or financial position of the Company.
Pursuant to the terms of the Asset Purchase Agreement, the Company sold the net assets of the call box division on July 10, 2008 for total cash of $2.7 million which was received on July 10, 2008. The purchase price was determined based upon the net assets of the call box division as of June 30, 2008 and therefore, an adjustment will be made to the purchase price for call box operations from July 1, 2008 through July 10, 2008. The Company expects to record a gain on the sale of net assets of approximately $0.4 million and expects to incur transaction costs consisting primarily of legal and accounting fees of approximately $0.1 million.
Commencing with its second quarter filing, the Company will account for the operations of its call box business as a discontinued operation in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-lived Assets.
COMARCO, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of April 30, 2008
(In thousands)
Comarco Historical | Less: Adjusted Call Box Historical | Comarco Pro Forma | |||||||
Current Assets: | |||||||||
Cash and cash equivalents | $ | 10,068 | $ | — | $ | 10,068 | |||
Short-term investments | 146 | — | 146 | ||||||
Accounts receivable, net | 15,636 | 973 | 14,663 | ||||||
Inventory, net | 4,619 | 1,504 | 3,115 | ||||||
Other current assets | 965 | 15 | 950 | ||||||
Total current assets | 31,434 | 2,492 | 28,942 | ||||||
Property and equipment, net | 2,472 | 14 | 2,458 | ||||||
Software development costs, net | 153 | — | 153 | ||||||
Acquired intangible assets, net | 546 | — | 546 | ||||||
Goodwill | 1,898 | — | 1,898 | ||||||
Restricted cash | 250 | — | 250 | ||||||
Other assets | 17 | 13 | 4 | ||||||
Total assets | $ | 36,770 | $ | 2,519 | $ | 34,251 | |||
Current Liabilities: | |||||||||
Accounts payable | $ | 985 | $ | 43 | $ | 942 | |||
Deferred revenue | 4,797 | 562 | 4,235 | ||||||
Deferred compensation | 146 | — | 146 | ||||||
Accrued liabilities | 9,620 | 543 | 9,077 | ||||||
Total current liabilities | 15,548 | 1,148 | 14,400 | ||||||
Fin 48 tax liability | 86 | — | 86 | ||||||
Deferred rent | 522 | — | 522 | ||||||
Deferred revenue | 1,354 | 15 | 1,339 | ||||||
Total liabilities | 17,510 | 1,163 | 16,347 | ||||||
Stockholders’ Equity: | |||||||||
Common stock | 733 | — | 733 | ||||||
Paid-in capital | 14,536 | — | 14,536 | ||||||
Retained earnings | 3,991 | 1,356 | 2,635 | ||||||
Total stockholders’ equity | 19,260 | 1,356 | 17,904 | ||||||
Total liabilities and stockholders’ equity | $ | 36,770 | $ | 2,519 | $ | 34,251 | |||
Note: | The call box historical amounts disclosed above exclude certain allocations made for business segment reporting as disclosed in the Company’s Form 10-Q for the quarter ended April 30, 2008. |
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COMARCO, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended April 30, 2008
(In thousands, except per share amounts)
Comarco Historical | Less: Adjusted Call Box Historical | Comarco Pro Forma | |||||||||
Revenue | $ | 12,333 | $ | 2,421 | $ | 9,912 | |||||
Cost of revenue | 7,653 | 1,464 | 6,189 | ||||||||
Gross profit | 4,680 | 957 | 3,723 | ||||||||
Selling, general and administrative expenses | 4,312 | 83 | 4,229 | ||||||||
Engineering and support costs | 2,078 | 100 | 1,978 | ||||||||
Operating income (loss) | (1,710 | ) | 774 | (2,484 | ) | ||||||
Other income, net | 53 | — | 53 | ||||||||
Income (loss) before income taxes | (1,657 | ) | 774 | (2,431 | ) | ||||||
Income tax expense | — | — | — | ||||||||
Net income (loss) | $ | (1,657 | ) | $ | 774 | $ | (2,431 | ) | |||
Basic and Diluted: | |||||||||||
Net loss per share | $ | (0.23 | ) | $ | (0.33 | ) | |||||
Weighted average shares outstanding | 7,327 | 7,327 |
Note: | The call box historical amounts disclosed above exclude certain allocations made for business segment reporting as disclosed in the Company’s Form 10-Q for the quarter ended April 30, 2008. |
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COMARCO, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended January 31, 2008
(In thousands, except per share amounts)
Comarco Historical | Less: Adjusted Call Box Historical | Comarco Pro Forma | |||||||||
Revenue | $ | 23,200 | $ | 11,109 | $ | 12,091 | |||||
Cost of revenue | 17,374 | 6,311 | 11,063 | ||||||||
Gross profit | 5,826 | 4,798 | 1,028 | ||||||||
Selling, general and administrative expenses | 10,244 | 356 | 9,888 | ||||||||
Asset impairment charge | 496 | 496 | — | ||||||||
Engineering and support costs | 8,799 | 387 | 8,412 | ||||||||
Operating income (loss) | (13,713 | ) | 3,559 | (17,272 | ) | ||||||
Other income, net | 842 | — | 842 | ||||||||
Gain on sale of investment in SwissQual | 1,976 | — | 1,976 | ||||||||
Gain on sale of equipment, net | 321 | — | 321 | ||||||||
Income (loss) before income taxes | (10,574 | ) | 3,559 | (14,133 | ) | ||||||
Income tax expense (benefit) | (590 | ) | — | (590 | ) | ||||||
Net income (loss) | $ | (9,984 | ) | $ | 3,559 | $ | (13,543 | ) | |||
Basic and Diluted: | |||||||||||
Net loss per share | $ | (1.36 | ) | $ | (1.85 | ) | |||||
Weighted average shares outstanding | 7,338 | 7,338 |
Note: | The call box historical amounts disclosed above exclude certain allocations made for business segment reporting as disclosed in the Company’s Form 10-K for the year ended January 31, 2008. |
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