SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 31, 1997 A. Full title of the plan and address of the plan, if different from that of the issuer named below: COMARCO, Inc. SAVINGS AND RETIREMENT PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: COMARCO, Inc. 22800 Savi Ranch Parkway, Suite 214 Yorba Linda, CA 92887 COMARCO, INC. SAVINGS AND RETIREMENT PLAN FINANCIAL STATEMENTS (Including Supplemental Schedules) December 31, 1997 and 1996 (With Independent Auditors' Report Thereon) COMARCO, INC. SAVINGS AND RETIREMENT PLAN INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES Page ---- Independent Auditors' Report 4 Statements of Net Assets Available for Plan Benefits as of December 31, 1997 and 1996 5 Statements of Changes in Net Assets Available for Plan Benefits for the Years Ended December 31, 1997, 1996 and 1995 6 Notes to Financial Statements 7 SUPPLEMENTAL SCHEDULES Schedule 1 - Item 27a - Schedule of Assets Held for Investment 14 Purposes As of December 31, 1997 Schedule 2 - Item 27b - Schedule of Loans or Fixed Income Obligations Year Ended December 31, 1997 15 Schedule 3 - Item 27d- Schedule of Reportable Transactions Year Ended December 31, 1997 16 The additional schedules required under the Employee Retirement Income Security Act of 1974 and regulations issued by the Department of Labor are not presented because they are not applicable or are not a required disclosure. INDEPENDENT AUDITORS' REPORT The Board of Directors COMARCO, Inc.: We have audited the accompanying statements of net assets available for plan benefits of the COMARCO, Inc. Savings and Retirement Plan (the "Plan") as of December 31, 1997 and 1996, and the related statements of changes in net assets available for plan benefits for each of the years in the three-year period ended December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1997 and 1996, and the changes in net assets available for plan benefits for each of the years in the three-year period ended December 31, 1997, in conformity with generally accepted accounting principles. Our audits of the Plan's financial statements as of December 31, 1997 and 1996, and for each of the years in the three-year period ended December 31, 1997 were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of Assets Held for Investment Purposes, Loans or Fixed Income Obligations and Reportable Transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supple- mentary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements, and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. KPMG Peat Marwick LLP McLean, Virginia June 18, 1998 COMARCO, INC. SAVINGS AND RETIREMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS December 31, 1997 and 1996 1997 1996 ---- ---- ASSETS Cash and cash equivalents (Note 4) $ 19,000 $ 27,000 Investment in 193,044 shares in 1997 and 203,836 shares in 1996 of COMARCO common stock, at fair value (Note 4) 4,247,000 3,720,000 Investment in mutual funds, at fair value (Note 4) CGCM Small Cap Growth Fund 2,623,000 2,195,000 CGCM Large Cap Growth Fund 2,760,000 1,963,000 CGCM Large Cap Value Fund 3,031,000 2,303,000 CGCM International Fund 1,258,000 1,238,000 CGCM Long Term Bond 1,006,000 776,000 CGCM Stable Value Fund 2,944,000 2,450,000 CGCM Emerging Market Fund 22,000 - ---------- ---------- Total Investment in Mutual Funds 13,644,000 10,925,000 Investment in investment contracts, at contract value (Notes 4 and 5) - 629,000 Participant Loans 355,000 314,000 ---------- ---------- Total Assets 18,265,000 15,615,000 LIABILITIES Fees payable (Note 7) - - ---------- ---------- Net assets available for plan benefits $18,265,000 $15,615,000 ========== ========== See accompanying notes to the financial statements. COMARCO, INC. SAVINGS AND RETIREMENT PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Years Ended December 31, 1997, 1996 and 1995 1997 1996 1995 ---- ---- ---- Net assets available for plan benefits, beginning of year $ 15,615,000 $ 12,274,000 $ 11,157,000 ---------- ---------- ---------- Additions: Contributions: Employer 602,000 526,000 599,000 Employee 1,569,000 1,326,000 1,498,000 Rollovers (Note 3) 96,000 1,100,000 - Interest and dividends 127,000 215,000 164,000 Realized and unrealized appreciation of investments 2,445,000 1,732,000 2,571,000 ---------- ---------- ---------- Total additions 4,839,000 4,899,000 4,832,000 ---------- ---------- ---------- Deductions: Plan distributions 2,082,000 1,441,000 2,571,000 Transfer of shares to Employee Stock Ownership Plan (Note 3) - - 1,078,000 Realized and unrealized depreciation of investments 12,000 38,000 - Administrative expenses (Note 7) 95,000 79,000 66,000 ---------- ---------- ---------- Total deductions 2,189,000 1,558,000 3,715,000 ---------- ---------- ---------- Net assets available for plan benefits, end of year $ 18,265,000 $ 15,615,000 $ 12,274,000 =========== ========== ========== See accompanying notes to the financial statements. COMARCO, INC. SAVINGS AND RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS December 31, 1997, 1996 and 1995 1. Description of the Plan The following description of the COMARCO, Inc. Savings and Retirement Plan (Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. General. The Plan is a defined contribution plan covering substantially all full-time employees of COMARCO, Inc. ("the Company" or "the Plan Sponsor") who have three months of service and are age 18 or older. It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Contributions. Employee contributions to the Plan may range from 1% to 15% of eligible earnings. Employees at one Company location are permitted to contribute up to 20%. The Company contributes 100% of the first 3% of earnings that a participant contributes to the Plan. All forfeitures of terminated participants' non-vested accounts are used to offset Plan expenses. In addition, the Company may, at its discretion, make an additional contribution each year to the Plan. Participant Accounts. Each participant's account is credited with the participant's contribution and the Company's matching contribution plus Plan earnings less Plan expenses not paid by the Company. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's account. At December 31, 1997 and 1996, 709 and 764 participants, respectively, had assets in the Plan. Loans. Effective January 1, 1995, the Plan permits participants to obtain loans from their account balances, subject to certain IRS limitations. The loans are repaid over fixed time periods. Vesting. Participants are vested at all times in their voluntary contributions and, in certain circumstances, the matching Company contributions plus actual earnings thereon. Company contributions generally vest over a 7 year graded vesting schedule. Exceptions to this graded vesting are the Company contributions which are invested in the Company's Stock-100 Fund, which are immediately 100% vested. (The Stock 100 Fund is no longer an investment option for the participants). Payment of Benefits. On termination of service, a participant may elect to receive either a lump-sum amount equal to the value of his or her account, annual installments, or monthly annuity payments. Participants with accrued benefits greater than $3,500 may elect to delay receiving benefits until reaching age 65. Investment Options. Participant contributions to the Plan are made to one of the eight investment options (Stable Value, Long Term Bond, Small Cap Growth, Large Cap Growth, Large Cap Value, International, Emerging Markets or Company Stock) as designated by the participant. All investment options other than COMARCO shares are provided through the Smith Barney TRAK program, and consist of fund shares. 2. Significant Accounting Policies Basis of Accounting - The Plan prepares its financial statements on the accrual basis of accounting. Payment of Benefits - Benefits are recorded when paid. Investment Valuation and Income Recognition - The Plan's investments are stated at fair value in the accompanying statements of net assets available for plan benefits except for its investment in investment contracts, which are valued at their respective contract values. Fair value is determined based on quoted market prices. The difference between cost and fair value of investments is recognized as a realized gain or loss at the date of disposition using the first-in, first-out method. Purchases and dispositions are recorded on a trade-date basis. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles 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 financial statements and the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates. 3. Employee Stock Option Plan The assets of the Plan prior to January 1, 1995 included shares of Company stock formerly held in the Company's Employee Stock Ownership Plan ("ESOP"), which were combined into the Savings and Retirement Plan. In 1995, the Company received approval from the Internal Revenue Service to terminate the ESOP, and consequently the former ESOP shares were transferred from the Savings and Retirement Plan back to the ESOP. In 1996, the ESOP was terminated and a majority of the participants elected to roll their ESOP shares into the Savings and Retirement Plan. 4. Investments All amounts contributed to the Plan have been deposited with the Funding Agent, SBS Trust. The following table presents the fair values of investments. Investments that represent 5% or more of the Plan's net assets are separately identified. December 31, 1997 December 31, 1996 ----------------- ----------------- Identity of Party and Shares or Carrying Shares or Carrying Description of Asset Principal Amount Amount Principal Amount Amount --------------------- ---------------- --------- ---------------- -------- Cash and Cash Equivalents: SBS Short Term Investment Fund $ 19,000 $ 27,000 Investments: Guaranteed Investment Contracts: Various - 629,000 Total Investment Contracts - 629,000 ------- Mutual Funds: CGCM Small Cap Growth Fund 155,000 2,623,000 134,000 2,195,000 CGCM Large Cap Growth Fund 162,000 2,760,000 138,000 1,963,000 CGCM Large Cap Value Fund 228,000 3,031,000 188,000 2,303,000 CGCM International Fund 126,000 1,258,000 123,000 1,238,000 CGCM Long Term Bond 115,000 1,006,000 94,000 776,000 CGCM Stable Value Fund 295,000 2,944,000 261,000 2,450,000 CGCM Emerging Market Fund 3,000 22,000 --------- ---------- Total Mutual Funds 13,644,000 10,925,000 ---------- ---------- Participant Loans 355,000 314,000 COMARCO common stock 193,000 4,247,000 204,000 3,720,000 --------- --------- Total Investments $ 18,265,000 $ 15,615,000 ========== ========== 5. Investment Contracts The Stable Value option is a blend of individual investment contracts (purchased by COMARCO and which all matured in 1997) and the Consulting Group Capital Markets (CGCM) Stable Value Fund. The contracts are included in the financial statements at contract value, which approximates fair value. Contract value represents contributions made under the contract, plus earnings, less administrative expenses. Investment contracts in the Stable Value Fund are considered fully benefit responsive, as they provide reasonable access to the funds by the Plan's participants, with a liquidity guarantee. The average yields earned on guaranteed investment contracts for the years ended December 31, 1997 and 1996 were 5.1% for both years. 6. Changes in Net Assets by Investment Program The changes in net assets by investment program for the years ended December 31, 1995, 1996, and 1997 are as follows: Stable Value Equity Growth Balanced Stock Long Term Fund Fund Fund Fund International Bond -------------------------------------------------------------------------------------- Net assets available for plan benefits January 1, 1995 $4,574,000 $1,265,000 $1,452,000 $3,880,000 $0 $0 Additions: Contributions: Employer $101,000 $0 $0 $47,000 $69,000 $45,000 Employee $298,000 $0 $0 $108,000 $207,000 $141,000 Interest and dividends $44,000 $0 $0 $1,000 $15,000 $41,000 Realized and unrealized appreciation $138,000 $0 $0 $1,256,000 $80,000 $96,000 of investments -------------------------------------------------------------------------------------- Subtotal $581,000 $0 $0 $1,412,000 $371,000 $323,000 -------------------------------------------------------------------------------------- Transfer between funds ($1,373,000) ($1,230,000) ($1,378,000) ($944,000) $671,000 $751,000 Deductions: Plan distributions $940,000 $35,000 $74,000 $553,000 $88,000 $178,000 Transfer of shares to Employee Stock Ownership Plan (Note 3) $0 $0 $0 $1,078,000 $0 $0 Realized and unrealized depreciation of investments $0 $0 $0 $0 $0 $0 Administrative expenses $0 $0 $0 $0 $2,000 $3,000 -------------------------------------------------------------------------------------- Subtotal $940,000 $35,000 $74,000 $1,631,000 $90,000 $181,000 -------------------------------------------------------------------------------------- Net assets available for plan benefits December 31, 1995 $2,842,000 $0 $0 $2,717,000 $952,000 $893,000 ====================================================================================== 6. Changes in Net Assets by Investment Program (table continued) Large Cap Large Cap Small Cap Participant Holding/ Growth Value Growth Notes Other Total ------------------------------------------------------------------------------------ Net assets available for plan benefits January 1, 1995 $0 $0 $0 $0 ($14,000) $11,157,000 Additions: Contributions: Employer $69,000 $71,000 $99,000 $0 $98,000 $599,000 Employee $213,000 $232,000 $299,000 $0 $0 $1,498,000 Interest and dividends $6,000 $36,000 - $8,000 $13,000 $164,000 Realized and unrealized appreciation $266,000 $343,000 $392,000 $0 $0 $2,571,000 of investments ------------------------------------------------------------------------------------ Subtotal $554,000 $682,000 $790,000 $8,000 $111,000 $4,832,000 ------------------------------------------------------------------------------------ Transfer between funds $936,000 $1,225,000 $927,000 $210,000 $205,000 $0 Deductions: Plan distributions $212,000 $251,000 $223,000 $0 $17,000 $2,571,000 Transfer of shares to Employee Stock Ownership Plan (Note 3) $0 $0 $0 $0 $0 $1,078,000 Realized and unrealized depreciation of investments $0 $0 $0 $0 $0 $0 Administrative expenses $3,000 $4,000 $4,000 $0 $50,000 $66,000 ------------------------------------------------------------------------------------ Subtotal $215,000 $255,000 $227,000 $0 $67,000 $3,715,000 ------------------------------------------------------------------------------------ Net assets available for plan benefits December 31, 1995 $1,275,000 $1,652,000 $1,490,000 $218,000 $235,000 $12,274,000 ==================================================================================== 6. Changes in Net Assets by Investment Program (continued) Stable Value Stock Long Term Large Cap Fund Fund International Bond Growth ------------------------------------------------------------------------ Net assets available for plan benefits January 1, 1996 $2,842,000 $2,717,000 $952,000 $893,000 $1,275,000 Additions: Contributions: Employer $84,000 $63,000 $82,000 $39,000 $112,000 Employee $174,000 $99,000 $183,000 $83,000 $256,000 Rollovers $11,000 $1,066,000 $16,000 $1,000 $2,000 Interest and dividends $53,000 $0 $15,000 $53,000 $11,000 Realized and unrealized appreciation $125,000 $622,000 $39,000 $0 $300,000 of investments ------------------------------------------------------------------------ Subtotal $447,000 $1,850,000 $335,000 $176,000 $681,000 ------------------------------------------------------------------------ Transfer between funds $207,000 ($606,000) $59,000 ($205,000) $131,000 Deductions: Plan distributions $407,000 $241,000 $103,000 $46,000 $117,000 Realized and unrealized depreciation of investments $0 $0 $0 $38,000 $0 Administrative expenses $10,000 $0 $5,000 $4,000 $7,000 ------------------------------------------------------------------------ Subtotal $417,000 $241,000 $108,000 $88,000 $124,000 ------------------------------------------------------------------------ Net assets available for plan benefits December 31, 1996 $3,079,000 $3,720,000 $1,238,000 $776,000 $1,963,000 ======================================================================== 6. Changes in Net Assets by Investment Program (table continued) Large Cap Small Cap Participant Holding/ Value Growth Notes Other Total ------------------------------------------------------------------------- Net assets available for plan benefits January 1, 1996 $1,652,000 $1,490,000 $218,000 $235,000 $12,274,000 Additions: Contributions: Employer $88,000 $156,000 $0 ($98,000) $526,000 Employee $210,000 $354,000 $0 ($33,000) $1,326,000 Rollovers $1,000 $3,000 $0 $0 $1,100,000 Interest and dividends $61,000 $0 $22,000 $0 $215,000 Realized and unrealized appreciation $319,000 $325,000 $0 $2,000 $1,732,000 of investments ----------------------------------------------------------------------- Subtotal $679,000 $838,000 $22,000 ($129,000) $4,899,000 ----------------------------------------------------------------------- Transfer between funds $112,000 $158,000 $88,000 $56,000 $0 Deductions: Plan distributions $131,000 $282,000 $14,000 $100,000 $1,441,000 Realized and unrealized depreciation of investments $0 $0 $0 $0 $38,000 Administrative expenses $9,000 $9,000 $0 $35,000 $79,000 ----------------------------------------------------------------------- Subtotal $140,000 $291,000 $14,000 $135,000 $1,558,000 ----------------------------------------------------------------------- Net assets available for plan benefits December 31, 1996 $2,303,000 $2,195,000 $314,000 $27,000 $15,615,000 ======================================================================= 6. Changes in Net Assets by Investment Program (continued) Stable Value Stock Emerging Long Term Large Cap Fund Fund International Markets Bond Growth ----------------------------------------------------------------------------------- Net assets available for plan benefits January 1, 1997 $3,079,000 $3,720,000 $1,238,000 $0 $776,000 $1,963,000 Additions: Contributions: Employer $72,000 $83,000 $65,000 $1,000 $32,000 $120,000 Employee $180,000 $151,000 $160,000 $3,000 $82,000 $324,000 Rollovers $6,000 $14,000 $2,000 $0 $3,000 $31,000 Interest and dividends $42,000 $0 $0 $0 $54,000 $0 Realized and unrealized appreciation $162,000 $720,000 $0 $0 $57,000 $578,000 of investments ----------------------------------------------------------------------------------- Subtotal $462,000 $968,000 $227,000 $4,000 $228,000 $1,053,000 ----------------------------------------------------------------------------------- Transfer between funds $208,000 ($66,000) ($72,000) $24,000 $33,000 ($61,000) Deductions: Plan distributions $780,000 $370,000 $121,000 $0 $26,000 $180,000 Realized and unrealized depreciation of investments $0 $0 $5,000 $6,000 $0 $0 Administrative expenses $25,000 $5,000 $9,000 $0 $5,000 $16,000 ----------------------------------------------------------------------------------- Subtotal $805,000 $375,000 $135,000 $6,000 $31,000 $196,000 ----------------------------------------------------------------------------------- Net assets available for plan benefits December 31, 1997 $2,944,000 $4,247,000 $1,258,000 $22,000 $1,006,000 $2,759,000 =================================================================================== 6. Changes in Net Assets by Investment Program (table continued) Large Cap Small Cap Participant Holding/ Value Growth Notes Other Total -------------------------------------------------------------------------- Net assets available for plan benefits January 1, 1997 $2,303,000 $2,195,000 $314,000 $27,000 $15,615,000 Additions: Contributions: Employer $90,000 $151,000 $0 ($12,000) $602,000 Employee $266,000 $402,000 $0 $1,000 $1,569,000 Rollovers $24,000 $16,000 $0 $0 $96,000 Interest and dividends $0 $0 $28,000 $3,000 $127,000 Realized and unrealized appreciation $704,000 $224,000 $0 $0 $2,445,000 of investments -------------------------------------------------------------------------- Subtotal $1,084,000 $793,000 $28,000 ($8,000) $4,839,000 -------------------------------------------------------------------------- Transfer between funds ($12,000) ($129,000) $80,000 ($5,000) $0 Deductions: Plan distributions $329,000 $216,000 $67,000 ($7,000) $2,082,000 Realized and unrealized depreciation of investments $0 $0 $0 $1,000 $12,000 Administrative expenses $15,000 $20,000 $0 $0 $95,000 -------------------------------------------------------------------------- Subtotal $344,000 $236,000 $67,000 ($6,000) $2,189,000 -------------------------------------------------------------------------- Net assets available for plan benefits December 31, 1997 $3,031,000 $2,623,000 $355,000 $20,000 $18,265,000 ========================================================================== 7. Expenses of the Plan The Plan provides that all reasonable expenses for custodial costs and fees incurred for the benefit of the Plan are to be paid by the Plan to the extent they are not paid by the Company. Total Plan expenses of approximately $95,000, $79,000 and $66,000 in 1997, 1996 and 1995 respectively, were paid by the Plan. Plan expenses accrued as of December 31, 1997 and 1996 were $0. 8. Income Tax Status The Internal Revenue Service has determined and informed the Company by letter dated February 9, 1995, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRS. 9. Plan Termination The Company intends to continue the plan indefinitely, but reserves the right at any time to terminate the Plan subject to the provisions of ERISA. Upon termination of the Plan, a participant's fund share shall become 100% vested and shall become payable in accordance with the "payment of benefits" article of the Plan. 10. Form 5500 The Form 5500 annual reports show benefits payable to terminated and in-service participants as a liability. This liability amounts to approximately $13,000 and $36,000 at December 31, 1997 and 1996, respectively. At December 31, 1997 and 1996, no amounts were payable to in-service employees. These benefits payable to plan participants are disclosed as components of net assets available for benefits for terminated and continuing participants rather than as a liability of the Plan in these financial statements. COMARCO, INC. SAVINGS AND RETIREMENT PLAN Item 27a - Schedule of Assets Held for Investment Purposes As of December 31, 1997 (a) (b) (c) (d) (e) Identity of issue, Description of investment including borrower, lessor maturity date, rate of interest, Current or similar party collateral, par or maturity value Cost Value - ------------------------------------------------------------------------------------------------------------------------ * SBS TRUST Short Term Investment Fund 19,499 19,499 * CGCM Consulting Group Cap Mkts Fund 115,443 shares 927,116 1,005,511 of Long Term Bond Investments Fund * CGCM Consulting Group Cap Mkts Fund 228,242 shares 2,575,332 3,031,055 of Large Cap Value Equity Investments Fund * CGCM Consulting Group Cap Mkts Fund 126,083 shares 1,284,544 1,258,309 of International Equity Investments Fund * CGCM Consulting Group Cap Mkts Fund 2,916 shares 27,226 21,723 of Emerging Market Equity Investments Fund * CGCM Consulting Group Cap Mkts Fund 162,339 shares 2,130,728 2,759,758 of Large Cap Growth Equity Investments Fund * CGCM Consulting Group Cap Mkts Fund 155,003 shares 2,488,477 2,622,649 of Small Cap Growth Equity Investments Fund * CGCM Consulting Group Cap Mkts Fund 295,056 shares 2,716,259 2,944,657 of Stable Value Investments Fund * COMARCO, Inc. COMARCO, Inc. common stock 1,445,426 4,246,968 193,044 shares, quote $22.00 * Plan Participants Participant Loans 355,063 355,063 COMARCO, Inc. Various dates and rates of 9% to 10% ---------- ---------- 13,969,720 18,265,192 ========== ========== * Party in interest COMARCO, INC. SAVINGS AND RETIREMENT PLAN Item 27b - Schedule of Loans or Fixed Income Obligations Year Ended December 31, 1997 Original Amount Received Unpaid Detailed Identity of Amount During Reporting Balance Description Amount Obligor of Loan Year at Year End of Loan Overdue - ------------------------------------------------------------------------------------------------------------------ Hoang, Sonny 29,637 137 29,500 Personal Loan 29,500 Davis, Deborah 7,600 333 7,267 Personal Loan 7,267 Reeves, Harry 13,000 397 12,603 Personal Loan 12,603 COMARCO, INC. SAVINGS AND RETIREMENT PLAN Item 27d - Schedule of Reportable Transactions Year Ended December 31, 1997 Cost of Asset Purchase Selling Cost of on Transaction Net Gain Identity of Party Involved Description of Asset Price Price Asset Date or (Loss) - ------------------------------------------------------------------------------------------------------------------------------------ Purchases: Smith Barney Trust RDA Cash Reserve Account 4,410,152 --- 4,410,152 4,410,152 --- Smith Barney Trust CGCM Small Cap Growth Fund 901,261 --- 901,261 901,261 --- Smith Barney Trust CGCM Large Cap Growth Fund 891,614 --- 891,614 891,614 --- Smith Barney Trust CGCM Large Cap Value Fund 1,202,368 --- 1,202,368 1,202,368 --- Smith Barney Trust CGCM Stable Value Fund 1,524,643 --- 1,524,643 1,524,643 --- Sales: Smith Barney Trust RDA Cash Reserve Account --- 4,431,095 4,431,095 4,431,095 --- Smith Barney Trust CGCM Small Cap Growth Fund --- 536,638 517,204 517,204 19,434 Smith Barney Trust CGCM Large Cap Growth Fund --- 485,374 367,535 367,535 117,839 Smith Barney Trust CGCM Large Cap Value Fund --- 656,423 496,668 496,668 159,755 Smith Barney Trust CGCM Stable Value Fund --- 1,184,985 1,087,115 1,087,115 97,870 This schedule of reportable transaction represents a series of transactions involving the same issue during the year ended December 31, 1997, which amounts in the aggregate to more than 5 percent ($781,000) of the fair value of total plan assets as of January 1, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrator has duly caused this annual report to be signed by the undersigned thereunto duly authorized. COMARCO, Inc. SAVINGS AND RETIREMENT PLAN BY: Don M. Bailey President & Chief Executive Officer COMARCO, Inc. DATE: June 18, 1998 CONSENT OF INDEPENDENT AUDITORS The Board of Directors COMARCO, Inc.: We consent to incorporation by reference in the registration statement (No. 33-44943) on Form S-8 of COMARCO, Inc. of our report dated June 18, 1998, relating to the statements of net assets available for plan benefits of COMARCO, Inc. Savings and Retirement Plan as of December 31, 1997 and 1996 and the related statements of changes in net assets available for plan benefits for each of the years in the three-year period ended December 31, 1997 which report appears in the December 31, 1997 annual report on Form 11-K of COMARCO, Inc. Savings and Retirement Plan. KPMG Peat Marwick LLP McLean, Virginia June 26, 1998