Comarco (CMRO) 10-Q 15 Dec 17 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Oct. 31, 2017	Dec. 15, 2017
Document And Entity Information
Entity Registrant Name	COMARCO INC
Entity Central Index Key	22,252
Document Type	10-Q
Document Period End Date	Oct. 31, 2017
Amendment Flag	false
Current Fiscal Year End Date	--01-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		14,614,165
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,018

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Oct. 31, 2017	Jan. 31, 2017
Current Assets
Cash and cash equivalents	$ 589	$ 618
Other current assets	18	14
Total current assets	607	632
Total assets	607	632
Current Liabilities
Accounts payable	3	6
Accrued liabilities	265	384
Income taxes payable		5
Total current liabilities	268	395
Long Term Liabilities
Preferred shares subject to mandatory redemption	700
Total liabilities	968	395
Stockholders’ Equity:
Series A Contingent Convertible Preferred stock, no par value, 10,000,000 shares authorized; 7,000,000 shares issued or outstanding
Common stock, $0.10 par value, 50,625,000 shares authorized; 14,614,165 shares issued and outstanding at July 31, 2017 and January 31, 2017	1,461	1,461
Additional paid-in capital	18,429	18,410
Accumulated deficit	(20,251)	(19,634)
Total stockholders’ (deficit) equity	(361)	237
Total liabilities and stockholders’ (deficit) equity	$ 607	$ 632

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parenthetical) - $ / shares	Oct. 31, 2017	Jan. 31, 2017
Statement of Financial Position [Abstract]
Series A Contingent Convertible Preferred stock, no par value
Series A Contingent Convertible Preferred stock, shares authorized	10,000,000	10,000,000
Series A Contingent Convertible Preferred stock, shares issued	7,000,000	7,000,000
Series A Contingent Convertible Preferred stock, shares outstanding	7,000,000	7,000,000
Common stock, par value	$ 0.10	$ 0.10
Common stock, shares authorized	50,625,000	50,625,000
Common stock, shares issued	14,614,165	14,614,165
Common stock, shares outstanding	14,614,165	14,614,165

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2017	Oct. 31, 2016	Oct. 31, 2017	Oct. 31, 2016
Income Statement [Abstract]
Royalty income			$ 6
Cost of revenue				(472)
Gross profit			6	472
Selling, general and administrative expenses	199	301	623	1,025
Operating expenses	199	301	623	1,025
Operating loss	(199)	(301)	(617)	(553)
Other income, net		1		1,705
(Loss) income from operations before income taxes	(199)	(300)	(617)	1,152
Income tax expense
Net (loss) income	$ (199)	$ (300)	$ (617)	$ 1,152
(Loss) income per share basic and diluted	$ (0.01)	$ (0.02)	$ (0.04)	$ 0.08
Weighted-average shares outstanding basic and diluted:	14,615,000	14,644,000	14,615,000	14,644,000

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Oct. 31, 2017	Oct. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$ (617)	$ 1,152
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		2
Stock-based compensation expense	19	18
Changes in operating assets and liabilities
Accounts receivable due from suppliers		122
Other current assets	(4)	12
Accounts payable	(3)	(756)
Accrued liabilities	(119)	(369)
Income taxes payable	(5)
Net cash (used in) provided by operating activities	(729)	181
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash		77
Net cash provided by investing activities		77
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred shares	700
Net cash provided by financing activities	700
Net (decrease) increase in cash and cash equivalents	(29)	258
Cash and cash equivalents, beginning of period	618	680
Cash and cash equivalents, end of period	589	938
Supplementary disclosures of cash flow information:
Cash paid for income taxes, net of refunds	$ 6

Organization

Organization	9 Months Ended
	Oct. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization	1. Organization Comarco, Inc. was incorporated in California in 1960 and its common stock has been publicly traded since 1971, when it was spun-off from Genge Industries, Inc. Comarco, Inc.’s wholly-owned subsidiary, Comarco Wireless Technologies, Inc. (“CWT”), was incorporated in the state of Delaware in September 1993. Comarco and CWT are collectively referred to as “we,” “us,” “our,” “Comarco,” or the “Company”.

Current Developments, Future Op

Current Developments, Future Operations, Liquidity and Capital Resources	9 Months Ended
	Oct. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Current Developments, Future Operations, Liquidity and Capital Resources	2. Current Developments, Future Operations, Liquidity and Capital Resources The unaudited consolidated financial statements have been prepared assuming that we will continue to operate as a going concern. As of October 31, 2017, we had working capital of $339,000. We have ceased traditional operations and are currently generating no product related revenues. As discussed in Note 8, on September 11, 2017, we sold 7,000,000 shares of our Series A Participating Preferred Stock for gross proceeds to us in the amount of $700,000 (“Series A Financing”). We believe the proceeds from our Series A Financing will provide us sufficient capital to allow us to discharge our liabilities and commitments in the normal course of business over the next twelve months. However, our ability to continue to operate as a going concern beyond that period is highly dependent on our ability to successfully resolve our current litigation, monetize our portfolio of patents, generate positive cash flow and/or obtain borrowings or raise additional capital. Our business is currently focused on potentially realizing value from our ongoing or future IP enforcement actions and other litigation, and if successful, further exploring opportunities to expand, protect, and monetize our patent portfolio, including through the potential sale or licensing of some or all our patent portfolio. On February 3, 2015, we filed a lawsuit against Apple, Inc. (“Apple”) for patent infringement. The complaint alleges that Apple products sold in the United States utilizing the Apple Lightning® power supply adapter system, including most iPad®, iPhone®, and iPod® products, infringe the Company’s patented intellectual property. This lawsuit represents our most significant enforcement effort to date, and, together with the Targus and Best Buy lawsuits described elsewhere in this document, demonstrates our ongoing and accelerated efforts to methodically pursue those companies that we believe have infringed on the intellectual property estate that we have developed over the last 20 years. In September of 2015, Apple filed a petition with the Patent Trial and Appeal Board (the “PTAB”) of the United States Patent and Trademark Office requesting inter partes On February 13, 2015, we filed a lawsuit against Best Buy for patent infringement under the patent laws of the United States. The complaint alleges that certain Best Buy power charging products sold in the United States under the Rocketfish brand infringe the Company’s patented intellectual property. Best Buy’s supplier Battery Biz filed a petition with the PTAB requesting an inter partes inter partes We have and will continue to analyze alternatives to build and/or preserve value for our stakeholders, including, but not limited to, exploring additional investment and incremental financing from current and/or new investors, the engagement of advisors to assist in exploring strategic options for us as well as identifying potential partnerships for the purpose of monetizing some or all of our patent portfolio and past, present, and future infringement claims. However, there can be no assurances that we will be successful in identifying and/or implementing any of these alternatives, or if implemented, that any of these alternatives will successfully preserve or increase shareholder value. We believe that our patent portfolio covering key technical aspects of our products could potentially generate a future revenue stream based upon royalties paid to us by others for the use of some or all of our patented technology in third-party products. We continue to explore opportunities to protect, and monetize our patent portfolio, including through the sale or licensing of our patent portfolio. We may or may not resume our traditional activities of producing innovative charging solutions for battery powered devices. There are no assurances that any of these potential opportunities or activities will occur or be successful.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Oct. 31, 2017
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	3. Summary of Significant Accounting Policies The summary of our significant accounting policies presented below is designed to assist the reader in understanding our consolidated financial statements. Such financial statements and related notes are the representations of our management, who are responsible for their integrity and objectivity. Basis of Presentation The accompanying condensed consolidated balance sheet as of January 31, 2017, which has been derived from our audited financial statements, and our unaudited interim consolidated financial statements as of, and for the three and nine months ended October 31, 2017 included herein have been prepared without audit in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information and with the instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Company believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the audited consolidated financial statements included in the Company’s annual report on Form 10-K for its fiscal year ended January 31, 2017 (the “2017 Form 10-K”), which was filed with the Securities and Exchange Commission, (“SEC”) on May 1, 2017. The unaudited interim consolidated financial information presented herein reflects all adjustments, consisting only of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of the consolidated results for the interim periods presented. The consolidated results for the three and nine months ended October 31, 2017 are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2018. Reclassification Certain prior year and prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. Principles of Consolidation The unaudited interim consolidated financial statements of the Company include the accounts of Comarco, Inc. and CWT, its wholly owned subsidiary. All material intercompany balances, transactions, and profits and losses have been eliminated. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the periods reported. Actual results could materially differ from those estimates. Certain accounting principles require subjective and complex judgments to be used in the preparation of financial statements. Accordingly, a different financial presentation could result depending on the judgments, estimates, or assumptions that are used. Such estimates and assumptions include, but are not specifically limited to, those required in the valuation allowances for deferred tax assets and determination of stock-based compensation. Cash and Cash Equivalents All highly liquid investments with original maturity dates of three months or less when acquired are classified as cash and cash equivalents. Fair Value of Financial Instruments Our financial instruments include cash and cash equivalents, accounts payable and accrued liabilities. The carrying amount of cash and cash equivalents, accounts payable, and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments. Legal expense classification All legal expenses, including expenses related to our intellectual property litigation, maintenance of our patent portfolio, public company legal expense, and all other litigation expense, are included in selling, general, and administrative expenses in the accompanying condensed consolidated statement of operations. Income tax expense Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any required valuation allowance. We continue to maintain a full valuation allowance on the entire deferred tax asset balance. This valuation allowance was established based on management’s overall assessment of risks and uncertainties related to our future ability to realize, and hence, utilize certain deferred tax assets, primarily consisting of net operating loss carry forwards and temporary differences. Due to the current and prior years’ operating losses, the adjusted net deferred tax assets remained fully reserved as of July 31, 2017. Net (Loss) Income Per Common Share Basic net (loss) income per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period excluding the dilutive effect of potential common stock, which for us consists solely of stock awards. Diluted earnings per share reflects the dilution that would result from the exercise of all dilutive stock awards outstanding during the period. The effect of such potential common stock is computed using the treasury stock method (see Note 5). Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board “FASB” issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which is intended to improve financial reporting about leasing transactions. The new guidance will require lessees to recognize on their balance sheets the assets and liabilities for the rights and obligations created by leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 is effective for us in the first quarter of fiscal 2020. As we do not have any long-term leases, we do not expect the adoption of this updated authoritative guidance to have a significant impact on our consolidated financial statements. We do not believe that any other recently issued, but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Oct. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation	4. Stock-Based Compensation We grant stock awards for a fixed number of shares to employees, consultants’, and directors pursuant to our shareholder-approved equity incentive plans. The total compensation cost for vested awards not yet recognized is approximately $6,750 as of October 31, 2017. The vested awards are expected to fully recognized as compensation expense by the end of fiscal year 2018. During the three and nine months ended October 31, 2017 and 2016, no stock options and no restricted stock units were granted. We account for stock-based compensation using the modified prospective method, which requires measurement of compensation cost for all stock awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest. The fair value of stock options is determined using the Black-Scholes valuation model for options with ratable term vesting. The valuation model requires the input of subjective assumptions. These assumptions include estimating the length of time optionees will retain their vested stock options before exercising them (the “expected term”), the estimated volatility of our common stock price over the expected term, and the number of awards that will ultimately not complete their vesting requirements (“forfeitures”). Changes in these subjective assumptions can materially affect the estimate of fair value of stock-based compensation and, consequently, the related amount recognized as an expense on the consolidated statements of operations. As required under applicable accounting rules, we review our value stock-based awards granted in future periods. The values derived from using either the Lattice Binomial or the Black-Scholes model are recognized as an expense over the vesting period, net of estimated forfeitures. The estimation of stock awards that will ultimately vest requires significant judgment. Actual results, and future changes in estimates, may differ from our current estimates. The compensation expense recognized is summarized in the table below (in thousands except per share amounts): Three Months Ended Nine Months Ended October 31, October 31, 2017 2016 2017 2016 Stock-based compensation expense $ 7 $ - $ 19 $ 18 Impact on basic and diluted earnings per share $ - $ - $ - $ - Transactions and other information related to stock options outstanding under these plans for the three and nine months ended October 31, 2017 are summarized below: Outstanding Options Weighted-Ave. Number of Exercise Shares Price Balance, January 31, 2017 1,100,000 $ 0.37 Options granted - - Options canceled or expired - - Options exercised - - Balance, October 31, 2017 1,100,000 $ 0.37 Stock Options Exercisable at October 31, 2017 760,000 $ 0.44 As of October 31, 2017, the stock awards outstanding have an aggregate intrinsic value of $0, based on a closing market price of $0.03 per share on October 31, 2017. The following table summarizes information about the Company’s stock awards outstanding at October 31, 2017: Awards Outstanding Options Exercisable Range of Number of options Weighted-Ave. Remaining Contractural Weighted-Ave. Exercise/Grant Number of options Weighted-Ave. Exercise Exercise / Grant Prices Outstanding Life Price Exercisable Price $ 0.09 300,000 8.99 $ 0.09 - $ 0.09 $ 0.14 - $ 0.16 300,000 7.63 $ 0.15 300,000 $ 0.15 $ 0.40 385,000 4.75 $ 0.40 385,000 $ 0.40 $ 1.09 100,000 1.03 $ 1.00 60,000 $ 1.09 $ 4.53 15,000 0.33 $ 4.53 15,000 $ 4.53 1,100,000 760,000 Shares available under the plans for future grants at October 31, 2017 totaled 323,535.

Net (Loss) Income Per Share

Net (Loss) Income Per Share	9 Months Ended
	Oct. 31, 2017
Earnings Per Share [Abstract]
Net (Loss) Income Per Share	5. Net (Loss) Income Per Share We calculate basic (loss) income per share by dividing net (loss) income by the weighted-average number of common shares outstanding during the reporting period. Diluted (loss) income per share reflects the effects of dilutive potential common shares. Because we incurred a net loss for the three and nine months ended October 31, 2017, basic and diluted loss per share for this period were the same because the inclusion of potential common shares would have been dilutive. For the three and nine months ended October 31, 2016, basic and diluted income per share was the same as all potential common shares were antidilutive. Potential common shares of 35,427,100 and 35,310,836 relating to outstanding warrants and to stock awards to directors and our employee have been excluded from diluted weighted average common shares for the three and nine months ended October 31, 2017 and 2016, respectively, as the effect would have been antidilutive.

Accrued Liabilities

Accrued Liabilities	9 Months Ended
	Oct. 31, 2017
Payables and Accruals [Abstract]
Accrued Liabilities	6. Accrued Liabilities Accrued liabilities consist of the following as of October 31, 2017 and January 31, 2017 (in thousands): October 31, January 31, 2017 2017 Accrued legal and professional fees $ 148 $ 94 Accrued payroll and related expenses 10 21 Accrued consulting - 80 Other 107 189 $ 265 $ 384

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Oct. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	7. Commitments and Contingencies Executive Severance Commitments We have a severance compensation agreement with our Chief Executive Officer, Thomas Lanni. This agreement requires us to pay Mr. Lanni, in the event of a termination of employment following a change of control of the Company or certain other circumstances, the amount of his then current annual base salary and the amount of any bonus amount he would have achieved for the year in which the termination occurs plus the acceleration of unvested options. We have not recorded any liability in the accompanying condensed consolidated financial statements for this agreement. Executive and Board of Directors Compensation On November 2, 2013, the Company approved a deferred compensation plan for its Chief Executive Officer and Board of Directors. As of October 31, 2017, no compensation expense has been accrued under this deferred compensation plan as its goal has not yet been attained. Effective April 1, 2017, $1,250 per month of the retainer paid to the non-employee directors other than the Chairman of the Board was indefinitely deferred and the annual cash retainer was reduced to zero to enable the Company to spend incremental resources on it IP enforcement activities. Upon the achievement of certain, specific, targeted balance sheet targets, the deferred amounts will be paid out. Effective December 31, 2015, $2,500 per month of the retainer to be paid to the Chairman of the Board was indefinitely deferred to enable the Company to spend incremental resources on its intellectual property enforcement activities. Upon the achievement of certain, specific, targeted balance sheet targets, the deferred amounts will be paid out. Legal Contingencies On February 3, 2015, we filed a lawsuit against Apple, Inc. for patent infringement. The complaint alleges that Apple products sold in the United States utilizing the Apple Lightning® power supply adapter system, including most iPad®, iPhone®, and iPod® products, infringe the Company’s patented intellectual property. This lawsuit represents our most significant enforcement effort to date, and, together with the Targus and Best Buy lawsuits described elsewhere in this document, demonstrates our ongoing and accelerated efforts to methodically pursue those companies that we believe have infringed on the intellectual property estate that we have developed over the last 20 years. In September of 2015, Apple filed a petition with the PTAB requesting inter partes In addition to the pending matters described above, we are, from time to time, involved in various legal proceedings incidental to the conduct of our business. We are unable to predict the ultimate outcome of these matters.

Preferred Shares Subject to Man

Preferred Shares Subject to Mandatory Redemption	9 Months Ended
	Oct. 31, 2017
Preferred Shares Subject To Mandatory Redemption
Preferred Shares Subject to Mandatory Redemption	8. Preferred Shares Subject to Mandatory Redemption On September 11, 2017, we entered into subscription agreements (the “Subscription Agreements”) with our two largest existing shareholders, Broadwood Partners, L.P. (“Broadwood”) and Elkhorn Partners Limited Partnership (“Elkhorn”), pursuant to which Broadwood and Elkhorn subscribed for and purchased 5,000,000 shares and 2,000,000 shares, respectively, of the Company’s Series A Preferred Stock (as such term is defined in Item 5.03 of Form 8-K dated June 30, 2017 and filed with the SEC on Sep 13, 2017 ) at a purchase price of $0.10 per share, resulting in gross proceeds to the Company of $700,000. The Subscription Agreements also provide that upon the earlier of a Triggering Event (as described in Item 5.03 as referred to above) or immediately prior to the liquidation, dissolution or winding up of the Company (subject to the provisions of the Series A Preferred Stock) The “Preferred shares subject to mandatory redemption” are required to be redeemed three years from the date of issuance and as a result are recorded as a liability in the accompanying Condensed Consolidated Balance Sheets. The warrants will be issued to Broadwood and Elkhorn, as referred to above upon a Triggering Event for no additional consideration, warrants (the “Warrants”) to purchase 18,026,500 shares and 7,210,600 shares, respectively, of the Company’s common stock (“Common Stock”). If issued, the Warrants will have a term of eight years from the date of issuance and an exercise price of $0.05 per share of Common Stock. The Subscription Agreements and Warrants also contain other representations, warranties, and covenants customary for an investment of this type.

Subsequent Events

Subsequent Events	9 Months Ended
	Oct. 31, 2017
Subsequent Events [Abstract]
Subsequent Events	9. Subsequent Events The Company follows the guidance in FASB ASC Topic 855, Subsequent Events Subsequent to October 31, 2017, and through the date of this filing, the Company has had no material subsequent events.

Significant Accounting Policies

Significant Accounting Policies (Policies)	9 Months Ended
	Oct. 31, 2017
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying condensed consolidated balance sheet as of January 31, 2017, which has been derived from our audited financial statements, and our unaudited interim consolidated financial statements as of, and for the three and nine months ended October 31, 2017 included herein have been prepared without audit in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim information and with the instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The Company believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the audited consolidated financial statements included in the Company’s annual report on Form 10-K for its fiscal year ended January 31, 2017 (the “2017 Form 10-K”), which was filed with the Securities and Exchange Commission, (“SEC”) on May 1, 2017. The unaudited interim consolidated financial information presented herein reflects all adjustments, consisting only of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of the consolidated results for the interim periods presented. The consolidated results for the three and nine months ended October 31, 2017 are not necessarily indicative of the results to be expected for the fiscal year ending January 31, 2018.
Reclassification	Reclassification Certain prior year and prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.
Principles of Consolidation	Principles of Consolidation The unaudited interim consolidated financial statements of the Company include the accounts of Comarco, Inc. and CWT, its wholly owned subsidiary. All material intercompany balances, transactions, and profits and losses have been eliminated.
Use of Estimates	Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the periods reported. Actual results could materially differ from those estimates. Certain accounting principles require subjective and complex judgments to be used in the preparation of financial statements. Accordingly, a different financial presentation could result depending on the judgments, estimates, or assumptions that are used. Such estimates and assumptions include, but are not specifically limited to, those required in the valuation allowances for deferred tax assets and determination of stock-based compensation.
Cash and Cash Equivalents	Cash and Cash Equivalents All highly liquid investments with original maturity dates of three months or less when acquired are classified as cash and cash equivalents.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Our financial instruments include cash and cash equivalents, accounts payable and accrued liabilities. The carrying amount of cash and cash equivalents, accounts payable, and accrued liabilities are considered to be representative of their respective fair values because of the short-term nature of those instruments.
Legal Expense Classification	Legal expense classification All legal expenses, including expenses related to our intellectual property litigation, maintenance of our patent portfolio, public company legal expense, and all other litigation expense, are included in selling, general, and administrative expenses in the accompanying condensed consolidated statement of operations.
Income Tax Expense	Income tax expense Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any required valuation allowance. We continue to maintain a full valuation allowance on the entire deferred tax asset balance. This valuation allowance was established based on management’s overall assessment of risks and uncertainties related to our future ability to realize, and hence, utilize certain deferred tax assets, primarily consisting of net operating loss carry forwards and temporary differences. Due to the current and prior years’ operating losses, the adjusted net deferred tax assets remained fully reserved as of July 31, 2017.
Net (Loss) Income Per Common Share	Net (Loss) Income Per Common Share Basic net (loss) income per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period excluding the dilutive effect of potential common stock, which for us consists solely of stock awards. Diluted earnings per share reflects the dilution that would result from the exercise of all dilutive stock awards outstanding during the period. The effect of such potential common stock is computed using the treasury stock method (see Note 5).
Recent Accounting Pronouncements	Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board “FASB” issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which is intended to improve financial reporting about leasing transactions. The new guidance will require lessees to recognize on their balance sheets the assets and liabilities for the rights and obligations created by leases and to disclose key information about the leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. ASU 2016-02 is effective for us in the first quarter of fiscal 2020. As we do not have any long-term leases, we do not expect the adoption of this updated authoritative guidance to have a significant impact on our consolidated financial statements. We do not believe that any other recently issued, but not yet effective accounting standards, if adopted, would have a material impact on our consolidated financial statements.

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Oct. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Employee Service Share-based Compensation	The compensation expense recognized is summarized in the table below (in thousands except per share amounts): Three Months Ended Nine Months Ended October 31, October 31, 2017 2016 2017 2016 Stock-based compensation expense $ 7 $ - $ 19 $ 18 Impact on basic and diluted earnings per share $ - $ - $ - $ -
Schedule of Stock Options Granted	Transactions and other information related to stock options outstanding under these plans for the three and nine months ended October 31, 2017 are summarized below: Outstanding Options Weighted-Ave. Number of Exercise Shares Price Balance, January 31, 2017 1,100,000 $ 0.37 Options granted - - Options canceled or expired - - Options exercised - - Balance, October 31, 2017 1,100,000 $ 0.37 Stock Options Exercisable at October 31, 2017 760,000 $ 0.44
Schedule of Stock Awards Outstanding	The following table summarizes information about the Company’s stock awards outstanding at October 31, 2017: Awards Outstanding Options Exercisable Range of Number of options Weighted-Ave. Remaining Contractural Weighted-Ave. Exercise/Grant Number of options Weighted-Ave. Exercise Exercise / Grant Prices Outstanding Life Price Exercisable Price $ 0.09 300,000 8.99 $ 0.09 - $ 0.09 $ 0.14 - $ 0.16 300,000 7.63 $ 0.15 300,000 $ 0.15 $ 0.40 385,000 4.75 $ 0.40 385,000 $ 0.40 $ 1.09 100,000 1.03 $ 1.00 60,000 $ 1.09 $ 4.53 15,000 0.33 $ 4.53 15,000 $ 4.53 1,100,000 760,000

Accrued Liabilities (Tables)

Accrued Liabilities (Tables)	9 Months Ended
	Oct. 31, 2017
Payables and Accruals [Abstract]
Schedule of Accrued Liabilities	Accrued liabilities consist of the following as of October 31, 2017 and January 31, 2017 (in thousands): October 31, January 31, 2017 2017 Accrued legal and professional fees $ 148 $ 94 Accrued payroll and related expenses 10 21 Accrued consulting - 80 Other 107 189 $ 265 $ 384

Current Developments, Future 18

Current Developments, Future Operations, Liquidity and Capital Resources (Details Narrative) - USD ($) $ in Thousands	Sep. 11, 2017	Oct. 31, 2017	Oct. 31, 2016
Working capital		$ 339
Gross proceeds from issuance of preferred stock		$ 700
Series A Participating Preferred Stock [Member]
Number of stock issued during perod, shares	7,000,000
Gross proceeds from issuance of preferred stock	$ 700

Stock-Based Compensation (Detai

Stock-Based Compensation (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 31, 2017	Oct. 31, 2016	Oct. 31, 2017	Oct. 31, 2016
Compensation cost related to vested awards not yet recognized	$ 6,750		$ 6,750
Stock option granted gross	0	0	0	0
Stock options outstanding intrinsic value	$ 0		$ 0
Closing market price	$ 0.03		$ 0.03
Shares available for future grants	323,535		323,535
Restricted Stock [Member]
Stock option granted gross	0	0	0	0

Stock-Based Compensation - Sche

Stock-Based Compensation - Schedule of Compensation Related Expense (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2017	Oct. 31, 2016	Oct. 31, 2017	Oct. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-based compensation expense	$ 7		$ 19	$ 18
Impact on basic and diluted earnings per share	$ (0.01)	$ (0.02)	$ (0.04)	$ 0.08

Stock-Based Compensation - Sc21

Stock-Based Compensation - Schedule of Stock Options Granted (Details) - $ / shares	3 Months Ended		9 Months Ended
	Oct. 31, 2017	Oct. 31, 2016	Oct. 31, 2017	Oct. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of Shares, Outstanding Options beginning balance			1,100,000
Number of Shares, Options granted	0	0	0	0
Number of Shares, Options canceled or expired
Number of Shares, Options exercised
Number of Shares, Outstanding Options ending balance	1,100,000		1,100,000
Number of Shares, Options Exercisable ending balance	760,000		760,000
Weighted-Ave Exercise Price, beginning balance			$ 0.37
Weighted-Ave Exercise Price, Options granted
Weighted-Ave Exercise Price, Options canceled or expired
Weighted-Ave Exercise Price, Options exercised
Weighted-Ave Exercise Price, ending balance	$ 0.37		0.37
Weighted-Ave Exercise Price, Options Exercisable ending balance	$ 0.44		$ 0.44

Stock-Based Compensation - Sc22

Stock-Based Compensation - Schedule of Stock Awards Outstanding (Details)	9 Months Ended
	Oct. 31, 2017$ / sharesshares
Number of options outstanding | shares	1,100,000
Number of Option Exercisable | shares	760,000
Exercise Price Range One [Member]
Range of Exercise/Grant Prices, upper limit	$ 0.09
Number of options outstanding | shares	300,000
Weighted-Ave. Remaining Contractual Life	8 years 11 months 26 days
Weighted-Ave Exercise/Grant Price	$ 0.09
Number of Option Exercisable | shares
Weighted-Ave. Exercise Price, Exercisable	$ 0.09
Exercise Price Range Two [Member]
Range of Exercise/Grant Prices, upper limit	0.14
Range of Exercise/Grant Prices, lower limit	$ 0.16
Number of options outstanding | shares	300,000
Weighted-Ave. Remaining Contractual Life	7 years 7 months 17 days
Weighted-Ave Exercise/Grant Price	$ 0.15
Number of Option Exercisable | shares	300,000
Weighted-Ave. Exercise Price, Exercisable	$ 0.15
Exercise Price Range Three [Member]
Range of Exercise/Grant Prices, upper limit	$ 0.40
Number of options outstanding | shares	385,000
Weighted-Ave. Remaining Contractual Life	4 years 9 months
Weighted-Ave Exercise/Grant Price	$ 0.40
Number of Option Exercisable | shares	385,000
Weighted-Ave. Exercise Price, Exercisable	$ 0.40
Exercise Price Range Four [Member]
Range of Exercise/Grant Prices, upper limit	$ 1.09
Number of options outstanding | shares	100,000
Weighted-Ave. Remaining Contractual Life	1 year 11 days
Weighted-Ave Exercise/Grant Price	$ 1
Number of Option Exercisable | shares	60,000
Weighted-Ave. Exercise Price, Exercisable	$ 1.09
Exercise Price Range Five [Member]
Range of Exercise/Grant Prices, upper limit	$ 4.53
Number of options outstanding | shares	15,000
Weighted-Ave. Remaining Contractual Life	3 months 29 days
Weighted-Ave Exercise/Grant Price	$ 4.53
Number of Option Exercisable | shares	15,000
Weighted-Ave. Exercise Price, Exercisable	$ 4.53

Net (Loss) Income Per Share (De

Net (Loss) Income Per Share (Details Narrative) - shares	3 Months Ended		9 Months Ended
	Oct. 31, 2017	Oct. 31, 2016	Oct. 31, 2017	Oct. 31, 2016
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share, amount	35,427,100	35,310,836	35,427,100	35,310,836

Accrued Liabilities - Schedule

Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	Oct. 31, 2017	Jan. 31, 2017
Payables and Accruals [Abstract]
Accrued legal and professional fees	$ 148	$ 94
Accrued payroll and related expenses	10	21
Accrued consulting		80
Other	107	189
Total	$ 265	$ 384

Commitments and Contingencies (

Commitments and Contingencies (Details Narrative)	3 Months Ended
	Oct. 31, 2017USD ($)
Deferred compensation liability	$ 0
Non-employee Directors [Member]
Monthly deferred compensation	1,250
Board of Directors Chairman [Member]
Monthly deferred compensation	$ 2,500

Preferred Shares Subject to M26

Preferred Shares Subject to Mandatory Redemption (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	Sep. 11, 2017	Oct. 31, 2017	Oct. 31, 2016
Share price		$ 0.03
Gross proceeds from issuance of preferred stock		$ 700
Subscription Agreements [Member] | Broadwood Partners L.P. [Member] | Series A Preferred Stock [Member]
Number of shares issued during period	5,000,000
Warrant to purchase common stock	18,026,500
Subscription Agreements [Member] | Elkhorn Partners Limited Partnership [Member] | Series A Preferred Stock [Member]
Number of shares issued during period	2,000,000
Warrant to purchase common stock	7,210,600
Subscription Agreements [Member] | Broadwood Partners, L.P. and Elkhorn Partners Limited Partnership [Member] | Series A Preferred Stock [Member]
Share price	$ 0.10
Gross proceeds from issuance of preferred stock	$ 700
Warrant term	8 years
Warrant exercise price per share	$ 0.05