SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported) July 7, 2000
COMARCO, Inc.
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(Exact name of registrant as specified in its charter)
CALIFORNIA
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(State or other jurisdiction of incorporation)
0-5449 95-2088894
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(Commission File Number) (IRS Employer Identification No.)
2 Cromwell, Irvine, CA 92618
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (949) 599-7400
1551 North Tustin Avenue, Suite 840, Santa Ana, CA 92705
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(Former name or address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Comarco, Inc. (the "Company") sold portions of its information technology and
staffing business segments pursuant to two separate Asset Purchase Agreements to
Science Applications International Corporation of San Diego, California and EWA
Services, Inc. of Herndon, VA (the "Buyers"); the agreements dated as of July 7,
2000 and July 10, 2000, respectively.
Pursuant to the above referenced agreements, the Company transferred
substantially all of the assets of its information technology government
services business, for a combined purchase price of approximately $10.9 million.
The purchase price is subject to a post-closing adjustment to be made within
sixty days of closing. This adjustment will be based on any differences between
the closing purchase price and the final purchase price which will be prepared
for the Buyers' review within sixty days of closing, as well as post-closing
collections of certain accounts receivables. The closing purchase price was
negotiated by the Company and the Buyers. The Buyers assumed certain incurred
liabilities of the information technology government services business in the
ordinary course of business and certain liabilities arising under the assumed
contracts.
At closing, the Company received approximately $5.3 million in cash which is
being used to fund current operating activities including payment of certain
liabilities not assumed by the Buyers; approximately $1.3 million is due six
months after closing, including interest; and approximately $4.3 million is due
as certain accounts receivables are collected which is expected to occur within
ninety days of closing. The aforementioned amounts are subject to any
adjustments from the preparation of the final purchase price statements as
previously discussed.
A final transaction for the Company's airport services business is signed and is
expected to close in the Company's third quarter.
The foregoing description of the Agreements does not purport to be complete and
is qualified in its entirety by the terms and conditions of the Agreements
executed by the Company and the Buyers, copies of which have been filed as
exhibits hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
Included herein are the following unaudited pro forma financial information for
the registrant:
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of April 30, 2000
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheets (Unaudited)
(c) Exhibits
2.1 Purchase Agreement among Comarco, Inc., Comarco Systems, Inc. and Science
Applications International Corporation dated July 7, 2000
2.2 Purchase Agreement among Comarco, Inc., Comarco Systems, Inc. and EWA
Services, Inc. and for purposes of Section 10.14 only, Electronic Warfare
Associates, Inc. dated July 10, 2000.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
The following unaudited pro forma condensed consolidated balance sheet gives
effect to the sale by Comarco, Inc., (the "Company") of a portion of the assets
of the Company's information technology and staffing services business segment
in two separate Asset Purchase Agreements to Science Applications International
Corporation of San Diego, California and EWA Services, Inc. of Herndon, VA (the
"Buyers"); the agreements dated July 7, 2000 and July 10, 2000, respectively.
The unaudited pro forma condensed consolidated balance sheet has been prepared
as if the sale was consummated on April 30, 2000.
The pro forma condensed consolidated balance sheet is presented for
informational purposes only and does not purport to present the consolidated
financial position of Comarco, Inc. and Subsidiaries had the sales in fact
occurred on the date assumed nor does it represent a forecast of the
consolidated financial position or results of operations for any future period.
The pro forma condensed consolidated balance sheet should be read in conjunction
with the historical financial statements and accompanying notes of the Company
contained in the Company's Annual Report on Form 10-K dated April 26, 2000.
COMARCO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
January 31 April 30 April 30
2000 2000 2000
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(Pro Forma,
see Notes
(Audited) (Unaudited) Unaudited)
Current assets:
Cash and cash equivalents............................... $ 5,064 $ 5,738 $ 9,678
Short-term investments.................................. 3,721 3,329 3,329
Accounts receivable, net................................ 6,695 9,276 9,276
Inventory............................................... 4,852 5,270 5,270
Deferred tax asset...................................... 2,908 2,908 2,908
Net assets available for sale........................... 9,361 5,717 2,981
Other current assets.................................... 2,651 3,321 4,569
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Total current assets.................................. 35,252 35,559 38,011
Property and equipment, net................................ 2,763 3,276 3,276
Software development costs, net............................ 5,839 6,329 6,329
Intangible assets, net..................................... 2,222 2,144 2,144
Other assets............................................... 72 777 777
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$ 46,148 $ 48,085 $ 50,537
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................... $ 666 $ 797 $ 797
Deferred revenue......................................... 3,077 2,765 2,765
Accrued liabilities...................................... 8,052 8,511 10,963
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Total current liabilities.............................. 11,795 12,073 14,525
Deferred income taxes....................................... 2,599 2,599 2,599
Minority interest........................................... -- 114 114
Stockholders' equity:
Common stock, $.10 par value, 33,750,000 shares
authorized; 4,340,362 and 4,366,387 shares outstanding
at January 31, 2000 and April 30, 2000, respectively.... 434 437 437
Paid-in capital......................................... 4,692 5,244 5,244
Accumulated other comprehensive income:
Unrealized investment gains............................ 3 3 3
Retained earnings........................................ 26,625 27,615 27,615
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Total stockholders' equity............................. 31,754 33,299 33,299
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$ 46,148 $ 48,085 $ 50,537
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See accompanying notes to condensed financial statements.
COMARCO, INC. AND SUBSIDIARIES
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
The pro forma Condensed Consolidated Balance Sheet was prepared using the latest
available Form 10-Q, as of and for the quarter ended April 30, 2000. Key
assumptions are:
Stockholders' Equity
No gain or loss on the sale has been reflected. A final transaction for the
Company's airport services business is signed and is expected to close during
the third quarter.
Net Assets Available for Sale
The net assets available for sale consists of the net assets of the Company's
discontinued information technology and staffing services business segment. In
July 1999, the Company announced that it was developing a plan to divest this
business segment to concentrate all of its resources in growing its wireless
communication products and services business segment. Three other disposition
transactions were completed in the first quarter of fiscal year 2001, including
the sale of its commercial staffing services business. The current transactions
which are reflected in the pro forma condensed balance sheet, consists of sales
of portions of its information technology and staffing business segments
pursuant to two separate Asset Purchase Agreements to Science Applications
International Corporation of San Diego, California and EWA Services, Inc. of
Herndon, VA (the "Buyers"); the agreements dated as of July 7, 2000 and July 10,
2000, respectively. A final transaction for the Company's airport services
business line is signed and is expected to close in the Company's third quarter.
Proceeds
Proceeds received at closing of approximately $5.3 million are being used to
fund current operating activities including payment of liabilities not assumed
by the Buyers.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMARCO, Inc.
Dated: July 21, 2000
/s/ DANIEL R. LUTZ
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By: Daniel R. Lutz
Vice President and
Chief Financial Officer
EXHIBIT INDEX
2. Plan of acquisition, reorganization, arrangement, liquidation or succession
2.1 Purchase Agreement among Comarco, Inc., Comarco Systems, Inc. and
Science Applications International Corporation dated July 7, 2000
2.2 Purchase Agreement among Comarco, Inc., Comarco Systems, Inc. and EWA
Services, Inc. and for purposes of Section 10.14 only, Electronic
Warfare Associates, Inc. dated July 10, 2000.