Form 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For Quarter Ended April 30, 1999                  Commission File Number 0-5449



                                 COMARCO, Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                 CALIFORNIA                                   95-2088894
--------------------------------                         ----------------------
(State or other jurisdiction of                          (I.R.S. Employer
 incorporation or organization)                          Identification Number)

1551 North Tustin Avenue, Suite 840, Santa Ana, California      92705
----------------------------------------------------------      -----
(Address of principal executive office)                      (Zip Code)

Registrant's telephone number, including area code         (714) 796-1808
                                                           --------------




Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                                        Yes      X      No
                                                                ---         ---

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of May 31, 1999.

                         Common Stock,
                        $.10 Par Value                   4,401,760 Shares
                        --------------                   ----------------



<PAGE>


Index to Form 10-Q

                                                                   Page No.
Part I.        Financial Information


 Condensed Consolidated Balance Sheets
     April 30, 1999 and January 31, 1999                              1

 Condensed Consolidated Statements of Income
     Quarters ended April 30, 1999 and April 30, 1998                 2

 Condensed Consolidated Statements of Cash Flows
     Quarters ended April 30, 1999 and April 30, 1998                 3

 Condensed Consolidated Statements of Comprehensive Income            4
     Quarters ended April 30, 1999 and April 30, 1998

 Notes to Condensed Consolidated Financial Statements                 5-7

 Management's Discussion and Analysis of Financial
     Condition and Results of Operations                              8-15



PART II.       OTHER INFORMATION

 Item 6.     Exhibits and Reports on Form 8-K                         16

 Signature                                                            17



<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

                         COMARCO, Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheets
<TABLE>


                                                     April 30, 1999             January 31, 1999
ASSETS                                                  (Unaudited)                     *
<S>                                                  <C>                        <C>
Current assets:
         Cash and cash equivalents                   $       7,911,000          $      3,220,000
         Short-term investments                              2,645,000                 2,775,000
         Accounts receivable, net                           18,486,000                23,151,000
         Inventory                                           4,631,000                 4,157,000
         Deferred tax asset                                  2,112,000                 2,112,000
         Other current assets                                  608,000                   575,000
                                                     -----------------          ----------------

Total current assets                                        36,393,000                35,990,000

Long-term investments                                          325,000                   526,000
Property and equipment, net                                  2,354,000                 2,424,000
Software development costs, net                              4,489,000                 4,185,000
Intangible assets, net                                       3,491,000                 3,587,000
Other assets                                                   525,000                   575,000
                                                     -----------------          ----------------

TOTAL ASSETS                                         $      47,577,000          $    47,287,000
                                                     =================          ================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
         Accounts payable                            $       1,133,000          $      1,075,000
         Deferred revenue                                    2,700,000                 2,902,000
         Accrued liabilities                                10,173,000                10,180,000
                                                     -----------------          ----------------

Total current liabilities                                   14,006,000                14,157,000
Deferred income taxes                                        1,928,000                 1,928,000

Stockholders' equity:
         Common stock, $.10 par value,
           33,750,000   shares   authorized,
           4,431,360  and  4,456,460  shares
           outstanding at April 30, 1999 and
           January 31, 1999, respectively                      443,000                   446,000
         Capital contributed in excess of par value          2,280,000                 2,795,000
         Other comprehensive income:
           Unrealized investment gains                          16,000                    16,000
         Retained earnings                                  28,904,000                27,945,000
                                                     -----------------          ----------------

Total stockholders' equity                                  31,643,000                31,202,000
                                                     -----------------          ----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $      47,577,000          $     47,287,000
                                                     =================          ================

See accompanying notes to the condensed consolidated financial statements.
*The  condensed  consolidated  balance  sheet as of  January  31,  1999 has been
summarized  from the  Company's  audited  consolidated  balance sheet as of that
date.
</TABLE>



                         COMARCO, Inc. and Subsidiaries
                   Condensed Consolidated Statements of Income
                                   (Unaudited)
<TABLE>


                                                     Quarter Ended
                                         --------------------------------------------
                                         April 30, 1999               April 30, 1998
                                         --------------               --------------
<S>                                      <C>                          <C>
Revenues:
   Contract revenues                     $    13,332,000              $   14,394,000
   Product sales                               7,842,000                   7,357,000
                                               ---------                   ---------
                                              21,174,000                  21,751,000
                                              ----------                  ----------

Direct costs:
   Contract costs                              8,721,000                   9,716,000
   Cost of product sales                       3,981,000                   3,543,000
                                               ---------                   ---------
                                              12,702,000                  13,259,000

Indirect costs                                 7,006,000                   7,255,000
                                               ---------                   ---------

                                              19,708,000                  20,514,000
                                              ----------                  ----------

Operating income                               1,466,000                   1,237,000

Net interest income                               80,000                     118,000
                                                  ------                     -------

Income before income taxes                     1,546,000                   1,355,000

Income taxes                                     587,000                     515,000
                                                 -------                     -------

Net income                               $       959,000              $      840,000
                                         ===============               =============

Earnings per share
   Basic                                 $           .22              $          .18
                                         ===============              ==============

   Diluted                               $           .20              $          .17
                                         ===============              ==============


See accompanying notes to the condensed consolidated financial statements.
</TABLE>


<PAGE>
                         COMARCO, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>

                                                                                 Quarter Ended

                                                                  April 30, 1999             April 30, 1998
                                                                  --------------             --------------
<S>                                                               <C>                        <C>
Cash flows from operating activities:
    Net income                                                    $      959,000             $     840,000
    Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation and amortization                                     909,000                   597,000
       Provision for doubtful accounts receivable                         22,000                    22,000
       Net sales (purchases) of trading securities                        98,000                  (762,000)
       Decrease in accounts receivable                                 4,643,000                   604,000
       Decrease (increase) in inventory                                 (474,000)                  395,000
       Increase in other current assets                                  (33,000)                   (9,000)
       Decrease in other assets                                           50,000                     3,000
       Increase in accounts payable                                       58,000                   263,000
       Decrease in deferred revenue                                     (202,000)                  (72,000)
       Increase (decrease) in other current liabilities                   (7,000)                  304,000
                                                                  --------------             -------------

    Net cash provided by operating activities                          6,023,000                 2,185,000

Cash flows from investing activities:
    Sales of investments                                                 233,000                    87,000
    Purchases of property and equipment                                 (229,000)                 (221,000)
    Software development costs                                          (818,000)                 (571,000)
                                                                  --------------             -------------

    Net cash used in investing activities                               (814,000)                 (705,000)

Cash flows from financing activities:
    Proceeds from issuance of common stock                                31,000                     5,000
    Purchase of common stock                                            (549,000)                      -
                                                                  --------------             -------------

    Net cash provided (used) by financing activities                    (518,000)                    5,000
                                                                  --------------             -------------

Net increase in cash and cash equivalents                         $    4,691,000             $   1,485,000
                                                                  ==============             =============


Supplemental disclosures of cash flow information:
  Cash paid during the quarter for:
       Interest                                                   $            -             $           -
       Income taxes                                                      271,000                    39,000

See accompanying notes to the condensed consolidated financial statements.
</TABLE>


<PAGE>
                         COMARCO, Inc. and Subsidiaries
            Condensed Consolidated Statements of Comprehensive Income
                                   (Unaudited)

<TABLE>

                                                                    Quarter Ended
                                                       ---------------------------------------

                                                       April 30, 1999           April 30, 1998
                                                       --------------           --------------
   <S>                                                 <C>                      <C>
   Net income                                          $      959,000           $      840,000

   Other comprehensive income:
      Unrealized holding gains on investments,
          net of tax                                                -                        -
                                                       ---------------          --------------

   Comprehensive income                                $       959,000          $      840,000
                                                       ===============          ==============
</TABLE>



See accompanying notes to the condensed consolidated financial statements.


<PAGE>
                         COMARCO, Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements
                        April 30, 1999 and April 30,1998
                                   (Unaudited)

1.     General

       The financial statements have been prepared without audit.  However, they
       reflect all adjustments  which in the opinion of management are necessary
       to fairly state the  Company's  financial  position at April 30, 1999 and
       January 31, 1999 and the results of its operations and cash flows for the
       quarters  ended April 30, 1999 and April 30, 1998.  The  information  has
       been prepared in  accordance  with Form 10-Q  instructions,  but does not
       necessarily  include all information and footnotes  required by generally
       accepted  accounting  principles for complete financial  statements.  The
       results  of  the  quarter  ended  April  30,  1999  are  not  necessarily
       indicative of the results to be obtained for the full fiscal year.


2.     Significant Accounting Policies - Per Share Information

       During the year ended January 31, 1998, the Company adopted  Statement of
       Financial  Accounting Standards No. 128, Earnings per Share, and computed
       basic and  diluted  net income per share  based on the  weighted  average
       number of shares of common stock and potential  common stock  outstanding
       during the period.  Potential  common stock,  for purposes of determining
       diluted  earnings  per share,  includes  the  effects of  dilutive  stock
       options.  The effect of such potential common stock is computed using the
       treasury  stock  method.  Comparative  earnings  per share data have been
       restated for prior periods.  Consolidated  net income of the Company used
       for diluted  earnings per share  purposes is diluted as a result of stock
       options issued by the Company's  subsidiaries  which enable their holders
       to obtain the  subsidiaries'  common stock.  Basic and diluted net income
       per share are calculated as follows:

<TABLE>
                                                                      Quarter Ended

                                                         April 30, 1999           April 30, 1998
                                                         --------------           --------------
<S>                                                      <C>                      <C>

  Basic:

  Net income                                             $    959,000             $      840,000

  Weighted average shares outstanding                       4,456,000                  4,719,000
                                                            ---------                  ---------

  Basic income per common share                            $      .22                $       .18
                                                           ==========                ===========


  Diluted:

  Net income                                             $    959,000             $      840,000

  Less - net income allocated to subsidiary
    dilutive stock options outstanding                        (44,000)                   (22,000)
                                                         -------------             -------------

  Net income used in calculation of diluted
    income per share                                     $    915,000             $      818,000
                                                         ============             ==============


  Weighted average shares outstanding                       4,456,000                  4,719,000

  Plus - common equivalent shares  (determined
  using the "treasury stock" method
  representing shares issuable upon exercise
  of stock options                                            208,000                    206,000
                                                              -------                    -------

  Weighted average number of shares used in
    calculation of diluted income per common
    share                                                   4,664,000                  4,925,000
                                                            =========                  =========


  Diluted income per common share                          $      .20                 $      .17
                                                           ==========                 ==========

</TABLE>


3.     Business Segment Information

       The Company's  operations  have been  classified into two business areas:
       wireless  communications products and information technology and staffing
       services. The wireless communications  products area develops,  produces,
       and  markets a variety of  products  and  services  used in the  wireless
       communications industry. The information technology and staffing services
       area provides  services to Federal and local  government  and  commercial
       customers pursuant to established contracts. Corporate and other consists
       primarily of cash and cash equivalents,  investments,  fixed assets,  and
       other assets.


       Summarized  financial  information  by  business  segment  for the  first
       quarter of Fiscal Year 2000 is as follows:

<TABLE>
                                     Wireless              Information
                                  Communications          Technology and        Corporate
                                     Products           Staffing Services       and Other        Total
                                  --------------        -----------------       ---------       -----
 <S>                                 <C>                     <C>                <C>             <C>
 Revenues                             7,842                  13,332                -            21,174
 Income before income taxes           1,067                     483                 (4)          1,546
 Identifiable assets                 19,004                  16,226             12,347          47,577

</TABLE>

       Summarized  financial  information  by  business  segment  for the  first
quarter of Fiscal Year 1999 is as follows:

<TABLE>

                                    Wireless              Information
                                  Communications          Technology and        Corporate
                                     Products           Staffing Services       and Other       Total
                                  --------------        -----------------       ---------       -----
 <S>                                  <C>                    <C>                <C>             <C>
 Revenues                              7,311                 14,440                  -          21,751
 Income before income taxes              650                    655                 50           1,355
 Identifiable assets                  17,146                 13,904             14,184          45,234

</TABLE>


4.     Commitments and Contingencies

       The Company is subject to legal  proceedings and claims that arise in the
       ordinary  course  of  business.  In the  opinion  of  management  and the
       Company's legal counsel, the amount of ultimate liability with respect to
       these actions will not materially  affect the financial  condition of the
       Company.

       The  Company  has a  multi-year  fixed  price  contract  for  which it is
       negotiating a contract modification.  The contract is scheduled to end on
       September 30, 1999 and the Company cannot  complete the statement of work
       due to Government delays in providing required  equipment.  After initial
       negotiations, the Company is currently updating a proposal to include all
       identified open issues.  The Company had previously  submitted a proposal
       for a 22-month extension and additional funding of $2.7 million,  and the
       revised  proposal  is  anticipated to be   larger.  Management  currently
       expects  modification  will  not occur until  late  summer.  The  Company
       believes  that  it has a  meritorious  position,  and  if  necessary, the
       Company intends to seek all remedies available under  Federal procurement
       laws.


5.     Reclassifications

       Certain reclassifications of prior year amounts have been made to conform
       to the current year presentation.

<PAGE>


ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
              FINANCIAL CONDITION


              Except  for  the  historical  information  contained  herein,  the
              matters discussed in this Form 10-Q are forward-looking statements
              within the meaning of Section 21E of the  Securities  Exchange Act
              of 1934,  as amended,  and Section  27A of the  Securities  Act of
              1933, as amended, that involve risks and uncertainties. The actual
              results that the Company  achieves may differ  materially from any
              forward-looking  projections due to such risks and  uncertainties.
              Factors  which  could  cause  a  material  difference  in  results
              include,  but are not  limited  to, the  following:  regional  and
              national economic  conditions;  changes in interest rates; changes
              in  government   spending  polices  and/or  decisions   concerning
              specific programs;  individual business decisions of customers and
              business partners;  developments in technology;  new and expanding
              product lines;  competition  for employee  resources;  competitive
              factors and pricing  pressures;  the Year 2000  compliance  of the
              Company's  customers and business partners;  the Company's ability
              to achieve the  objectives of its business  plans;  and changes in
              government  laws  or   regulations.   Words  such  as  "believes,"
              "anticipates,"   "expects,"   "future,"   "intends,"  and  similar
              expressions  are intended to identify  forward-looking  statements
              but are not the exclusive means of identifying such statements.  A
              more  complete  discussion  of  business  risks is included in the
              Company's  Annual  Report on Form 10-K for the year ended  January
              31, 1999.

       (a)    Results of Operations

              During the first quarter of Fiscal Year 2000 (year ending  January
              31, 2000),  the Company  recorded total revenues of $21.2 million,
              down 2.8% from the  revenues of $21.8  million for the  comparable
              period of a year  earlier.  Decreased  year-to-year  revenues  are
              primarily due to:
              o  completion of the Company's  contract at Reagan
                 Washington  National  Airport,   which  expired
                 September 30, 1998;  this contract  contributed
                 $2.0  million of  revenue  in the prior  year's
                 first quarter;
              partially offset by:
               o increase in  information  technology services  of approximately
                 10%  period-to-period;
               o increase  in sales  of   wireless  communications  products  of
                 approximately  7%  period-to-period;
               o increase  in  commercial  staffing  services  of  approximately
                 7% period-to-period.

              Total  direct  costs of $12.7  million  for the first  quarter  of
              Fiscal  Year 2000  were  down $.6  million,  or 4.5%,  from  $13.3
              million for the first  quarter of Fiscal Year 1999.  The  decrease
              relates to the reduced revenue activity, as discussed above.

              Total  indirect  costs of $7.0  million  for the first  quarter of
              Fiscal Year 2000 were down $.3 million, or 4.1%, from $7.3 million
              for the first quarter of Fiscal Year 1999.  The decrease is due to
              reduced  indirect  costs of the wireless  communications  products
              business, as discussed below.

              Net interest income  (interest  income less interest  expense) for
              the first  quarter of Fiscal Year 2000  amounted  to  $80,000,  as
              compared to $118,000 for the comparable period of the prior fiscal
              year.  The  decrease is  principally  due to a  reduction  in cash
              available  to invest  from an average of $11  million in the first
              quarter  of Fiscal  Year 1999 to an  average  of $9 million in the
              first quarter of Fiscal Year 2000 and lower interest rates.

              The  Company's  effective tax rate for the first quarter of Fiscal
              Year 2000 is 38%, the same as the  comparable  period of the prior
              fiscal year.

              Net income of $1.0  million  for the first  quarter of Fiscal Year
              2000 is up from $.8  million  from the  comparable  period  of the
              prior  year.  Increased  net  income  period-to-period  is  due to
              increased  operating  results  from  its  wireless  communications
              products  business,  partially offset by reduced operating results
              from its  information  technology and staffing  services  business
              segment and lower interest income.


              Wireless Communications Products

              Wireless  communications  products revenues increased 6.8% to $7.8
              million  for the  first  quarter  of  Fiscal  Year  2000 from $7.3
              million for the comparable  period of the prior fiscal year.  This
              increase is due to market trial sales of the  Company's  universal
              power adapter,  partially offset by lower quarter-to-quarter sales
              of the Company's emergency callbox systems.  The Company currently
              expects callbox systems revenue to increase  significantly  in the
              second  quarter  as  the  Company   commenced   performance  under
              contracts to upgrade  systems in the Los Angeles and San Francisco
              areas late in the first  quarter.  Summary  operating  results for
              Comarco  Wireless  Technologies,   Inc.,  the  Company's  wireless
              communications products subsidiary, are as follows:

<TABLE>

                                                  Quarter Ended         Quarter Ended
                                                 April 30, 1999        April 30, 1998
                                                 --------------        --------------
              <S>                                 <C>                    <C>
              Revenues                            $7,842,000             $7,311,000
              Cost of product sales                3,981,000              3,496,000
                                                   ---------              ---------

              Gross margin                         3,861,000              3,815,000
              Gross margin percentage                49.2%                   52.2%

              Indirect costs*                      2,794,000              3,165,000
                                                   ---------              ---------

              Operating income                    $1,067,000              $ 650,000
                                                  ==========               ========
</TABLE>


              *Indirect  costs  include  selling,  general,  and  administrative
              expenses  as well  as  sustaining  engineering  and  research  and
              development expenses.

              The decreased gross margin percentage is due to market trial sales
              of the  Company's  universal  power adapter  product,  which has a
              lower  gross  margin  than the test and  measurement  and  revenue
              assurance product families of wireless communications products and
              due   to   higher    amortized    software    development    costs
              period-to-period.

              The  decrease  in  indirect  costs of $.4  million  for the  first
              quarter  of Fiscal  Year 2000  from the  comparable  period of the
              prior fiscal year is  principally  a result of reduced  sustaining
              engineering and product support costs as the product lines mature,
              as well as slightly decreased selling,  general and administrative
              costs.

              Operating  income as a  percentage  of  revenues  is 13.6% for the
              first  quarter  of  Fiscal  Year  2000,  compared  to 8.9% for the
              comparable  period of the prior  fiscal  year.  This  increase  is
              primarily due to the reduced indirect costs, as discussed above.

              The Company is continuing its product  development  program in its
              wireless  communications  products  business.  In accordance  with
              Financial  Accounting Standard No. 86, Accounting for the Costs of
              Computer Software to be Sold, Leased, or Otherwise  Marketed,  the
              Company  capitalized  $818,000  and  $571,000,  during  the  first
              quarters   of   Fiscal   Years   2000  and   1999,   respectively.
              Corresponding  amounts amortized in such periods were $568,000 and
              $291,000, respectively.

              The Company's future product  prospects will depend in part on its
              ability to enhance the functionality of its existing products in a
              timely and  cost-effective  manner and to identify,  develop,  and
              achieve  market  acceptance  of  new  products.  There  can  be no
              assurance   that  the   Company   will  be  able  to   respond  to
              technological  advances,  changes  in  customer  requirements,  or
              changes in regulatory requirements or industry standards,  and any
              significant  delays in  development,  introduction  or shipment of
              products, or achievement of acceptable product costs, could have a
              material  adverse  effect  on the  Company's  business,  operating
              results and financial condition.

              The Company's orders for wireless communications products totalled
              $8.5  million for the first  quarter of Fiscal Year 2000,  up from
              $5.2  million  from  the   comparable   prior   period.   For  the
              twelve-month  periods  ended  April  30,  1999  and  1998,  orders
              received  were  $36.8  million  and $26.6  million,  respectively.
              Because of the long sales cycle involved in selling these products
              and the high unit sales price,  the Company  believes  that orders
              are best  analyzed by looking at a  twelve-month  time period,  as
              orders can fluctuate  significantly  from quarter to quarter.  The
              value of unfilled orders at April 30, 1999 totalled $17.8 million,
              of which $5.3 million relates to long-term maintenance  contracts,
              and $3.7 million relates to the Company's  contract to upgrade the
              Los Angeles  County  callbox  system to comply with the  Americans
              with Disabilities Act's requirements for use by hearing and speech
              impaired  individuals.  The Company currently expects the majority
              of the Los Angeles County  contract to be performed in Fiscal Year
              2000.  Separately,  the  Company  has  recorded  $2.7  million  of
              deferred revenue for anticipated customer warranty obligations.

              The   Company   has    experienced    fluctuations   in   wireless
              communications  products  activity in each of the past five years,
              with  greater  sales in the  second  half of its  fiscal  year and
              lesser  amounts in the first  half,  although  this trend has been
              declining  over the same  five  years.  This  trend may or may not
              continue  as the  Company  broadens  its  wireless  communications
              products  offerings.  The  nature of the  wireless  communications
              products business is inherently  unpredictable;  sales and profits
              may  fluctuate   significantly   from  quarter  to  quarter;   and
              therefore,  period-to-period  comparisons of its operating results
              are not  necessarily  meaningful  and such  comparisons  cannot be
              relied upon as indicators of future performance.

              The  Company  faces  additional  risk  factors in  developing  its
              wireless  communications  products  business,  including:  foreign
              marketing,    capital   requirements,    technical   requirements,
              employees,  competition,  and proprietary information.  A negative
              impact to any of these risk factors could have a material  adverse
              effect on the Company's business, operating results, and financial
              condition.  Foreign  marketing risks include:  the need for export
              licenses; tariffs and other potential trade restrictions;  changes
              in laws  governing the  imposition of duties,  quotas,  taxes,  or
              other  charges  relating to the import or export of its  products;
              and changes in foreign  currency  exchange  rates which can impact
              customers' demand for the Company's  products and their ability to
              pay for the Company's products.  Other companies having a presence
              or doing business overseas may have advantages over the Company in
              these  areas.  Certain  components  used  by  the  Company  in its
              existing  products  are only  available  from  single or a limited
              number of suppliers,  and the inability by any of these  suppliers
              to fulfill Company  requirements  may result in an interruption in
              production.  Access  to the  technical  design  of  air  interface
              devices is  essential  for the Company to  anticipate  and develop
              compatible  wireless  communications   products,   therefore,  the
              inability to obtain such technical designs on a timely basis would
              have a direct impact on product design and schedule. The Company's
              future success also depends in large part on the continued service
              of its key  personnel,  and on its  ability to continue to attract
              and  retain  qualified   employees,   especially   highly  skilled
              engineers,  for whom  competition  in the industry is intense.  In
              addition,  the  ability of the  Company  to  compete  successfully
              depends  upon a number  of  factors,  including  the rate at which
              customers  accept the  Company's  products  in  overseas  markets,
              product quality and performance,  experienced  sales and marketing
              personnel,   rapid  development  of  new  products  and  features,
              evolving  industry  standards,  and the  number  and nature of the
              Company's competitors.  There can be no assurance that the Company
              will be able to compete  successfully  in the future.  The Company
              relies on a combination of trade secrets, copyrights,  patents and
              contractual rights to protect its intellectual property. There can
              be no  assurance  that  the  steps  taken by the  Company  will be
              adequate  to protect  its  technology;  in  addition,  the laws of
              certain foreign  countries in which the Company's  products may be
              sold do not protect the Company's  intellectual property rights to
              the same extent as do the laws of the United States.


              Information Technology and Staffing Services

              Revenues  provided by the  Company's  information  technology  and
              staffing services business area decreased 7.6%, from $14.4 million
              in the first  quarter of Fiscal Year 1999 to $13.3  million in the
              first quarter of Fiscal Year 2000.  Revenues in this business area
              decreased from 66.4% of the Company's  total revenues in the first
              quarter  of  Fiscal  Year  1999 to  62.7% of the  Company's  total
              revenues in the first quarter of Fiscal Year 2000. The decrease in
              period-to-period  revenue is principally  due to the completion of
              the  Company's  contract at Reagan  Washington  National  Airport,
              which  expired on September 30, 1998.  This  contract  contributed
              $2.0  million of revenue  in the prior  year  first  quarter.  The
              Company decided not to pursue the recompete of this contract since
              it was marginally profitable,  and it would have been unprofitable
              if reawarded to the Company.

              Sales  to the  U.S.  Government  as  well as to  government  prime
              contractors were 34% of the Company's total revenue during each of
              the first quarters of Fiscal Years 1999 and 2000. In the course of
              the Company's business,  its government contracts are periodically
              opened for competition.  The Company plans to aggressively compete
              for work  opened for  competition  to the extent  possible  and to
              selectively  pursue  certain high value  Government  procurements.
              There can be no  assurance  that the Company  will be selected and
              awarded the work associated with any of its future  proposals.  In
              addition,  government  agencies may terminate  their  contracts in
              whole or in part at their  convenience.  Government  agencies  may
              remove  funding  previously  provided or may not  exercise  option
              periods.  Therefore, there can be no assurance that the Government
              will fund the portions of existing contracts that are unfunded, or
              that the  governmental  agencies  will  exercise any options.  The
              Company  has a  multi-year  fixed price  contract  for which it is
              negotiating a contract modification.  The contract is scheduled to
              end on  September  30, 1999 and the Company  cannot  complete  the
              statement of work due to Government  delays in providing  required
              equipment.  After initial  negotiations,  the Company is currently
              updating a proposal to include all  identified  open  issues.  The
              Company  had  previously  submitted  a  proposal  for  a  22-month
              extension and additional funding of $2.7 million,  and the revised
              proposal  is  anticipated  to  be  larger.  Management   currently
              expects  modification  will  not  occur  until  late  summer.  The
              Company  believes  that  it has  a  meritorious  position,  and if
              necessary,  the  Company  intends to seek all  remedies  available
              under Federal procurement laws.

              Operating income (revenues less direct costs,  indirect costs, and
              depreciation  and  amortization)  for  the  Company's  information
              technology  and staffing  services  business  segment is down from
              $607,000  in the first  quarter of Fiscal Year 1999 to $399,000 in
              the first  quarter of Fiscal  Year 2000.  This  decrease is due to
              reduced  operating  income from  information  technology  services
              contracts and the completion of the contract at Reagan  Washington
              National  Airport.   Reduced  operating  income  from  information
              technology service contracts is due the Company's  expenditures in
              pursuing  efforts  in  the  commercial  and  Federal   non-defense
              marketplaces.


       (b)    Financial Condition

              The  Company  signed  a  loan  agreement  with  a  bank  effective
              September 26, 1994,  which was last amended  effective  August 21,
              1998.  The loan  agreement  consists  of a $10  million  revolving
              credit facility, which expires June 30, 2000. The revolving credit
              facility is unsecured  provided that the Company maintains certain
              covenants.  Currently,  management anticipates that cash flow will
              remain at a level which will enable the Company to avoid utilizing
              the  credit  facility  except to  support  letters  of credit  and
              acquisition  financing,  and  that  the  Company  will  be able to
              purchase  investments on a regular  basis.  The Company's cash and
              investment  balances  averaged $9 million  (includes highly liquid
              long-term  investments  with maturities of 12 to 36 months) during
              the first quarter of Fiscal Year 2000.  However,  maintaining such
              cash  balances  is  predicated  on  the  Company  maintaining  its
              business  base  and  is  subject  to the  cost  of  financing  new
              contracts, acquisitions, geographic expansion, product development
              costs, and stock re-purchases.

              During  the first  quarter  of Fiscal  Year  2000,  the  Company's
              average days' sales in accounts  receivable  decreased,  primarily
              due   to   collections   from   several    significant    wireless
              communications products customers during the quarter.

              Several additional key factors indicating the Company's  financial
condition include:

<TABLE>

                                    April 30, 1999         January 31, 1999
                                    --------------         ----------------
      <S>                          <C>                    <C>
      Current ratio                           2.60                    2.54
      Working capital              $    22,387,000        $     21,833,000
      Book value per share                   $7.14                   $7.00

</TABLE>


              The Company continued to demonstrate  solid financial  strength in
              the above  financial  factors  during the first  quarter of Fiscal
              Year 2000 due to continued profitable activity.

              During  the  first  quarter  of  Fiscal  Year  2000,  the  Company
              generated  $6.0 million of  cash flows  from operating activities,
              up sharply from $2.2 million in the prior  year's  first  quarter.
              This  increase   is  primarily  due to strong accounts  receivable
              collections during the current year's first quarter.

              The Company has a significant  commitment for capital expenditures
              at April 30,  1999 for Comarco  Wireless  Technologies,  Inc.  The
              Company  has  developed  and  intends to  continue  to develop new
              product line extensions for the wireless communications  industry.
              This product development program is expected to be funded from the
              Company's  current working  capital.  The amounts  capitalized and
              amortized  in  the  Company's  wireless   communications  products
              business in accordance with Financial  Accounting Standard No. 86,
              Accounting for the Costs of Computer Software to be Sold,  Leased,
              or   Otherwise   Marketed,    totaled   $818,000   and   $568,000,
              respectively, in the first quarter of Fiscal Year 2000.

              The  Company's   Board  of  Directors   has   authorized  a  stock
              re-purchase  program of up to  1,500,000  shares.  As of April 30,
              1999,  the Company  has  re-purchased  and  retired  approximately
              1,237,000  shares of which 27,100 shares with a purchase  price of
              $549,000 was  purchased in the first  quarter of Fiscal Year 2000.
              Over the term of the  program,  which  began in 1992,  the average
              price paid per share  re-purchased  under the  program  was $9.57.
              Subsequent to April 30, 1999 and through June 4, 1999, the Company
              has re-purchased  another 47,300 shares for an aggregate amount of
              $938,000.

              The Company is subject to legal  proceedings and claims that arise
              in the ordinary course of business.  In the opinion of management,
              the amount of ultimate  liability  with  respect to these  actions
              will not materially affect the  financial condition of the Company
              (see  Note  4 of  the Notes to  Condensed  Consolidated  Financial
              Statements).

              The  Company  believes  that its cash  flow  from  operations  and
              available  bank  borrowings  will be  sufficient  to  satisfy  the
              current and anticipated capital requirements for operations.


              Year 2000

              Many computer  systems and software  products  currently in use by
              businesses  and government  organizations  are coded to accept two
              digits,  rather  than four,  to specify  the year.  Such  computer
              systems and software products will be unable to properly interpret
              dates  beyond  the  year  1999,   which  could  lead  to  business
              disruptions  (the  "Year 2000  Issue").  The  Company's  technical
              personnel  has  assessed  the impact of the Year 2000 Issue on the
              Company's products and services.

              The Company has  established  a two-phase  program to complete its
              year 2000 efforts.  The first phase includes planning,  inventory,
              and assessment;  the final phase consists of correction,  testing,
              deployment,  and  acceptance.  The Company has divided its efforts
              into the  categories of internal  information  systems,  products,
              non-IT systems,  business partners,  and customers.  The status of
              each with respect to the Company's  two-phase process is addressed
              below.


              Information Systems

              The  Company has  received  letters or has  completed  remediation
              whereby all of its accounting and manufacturing  software has been
              determined  to be year 2000  compliant.  The Company is completing
              its inventory of computers and computer  peripheral  equipment and
              has determined that a few older units are not year 2000 compliant.
              These units will be  replaced  as part of the regular  replacement
              program  this year.  Remediation  efforts on the  readiness of the
              Company's  internal   information   systems  are  expected  to  be
              completed by late summer 1999.


              Products

              The  Company  has  assessed  the  year  2000   compliance  of  its
              software-based products along with the associated components.  The
              following detailed actions have been taken to date:

              Test and  measurement/revenue  assurance  products - Most software
              programs have been determined to be year 2000 compliant. For those
              requiring remediation, a detailed upgrade program has been sent to
              each  customer,  and the effort is being  coordinated  through the
              Company's normal upgrade program.

              Emergency  callboxes - The  technology  acquired from GTE has been
              determined  to  be  substantially  year  2000  compliant.  Changes
              required  are  minimal.  The  Company has  assessed  the year 2000
              reliability of the technology  acquired from Cubic  Communications
              and  determined  that  some  problems  may  exist.   Approximately
              two-thirds  of the  installed  base  is in the  process  of  being
              upgraded,  which will  eliminate any potential Year 2000 Issue for
              these callboxes. The remaining one-third of the installed base has
              been offered an upgrade proposal and if accepted, would remove any
              remaining  year  2000  concerns.  To the  degree  the  outstanding
              upgrade  proposals  are not  accepted,  there  would  remain  some
              possible year 2000  exposure.  At this time,  the Company does not
              believe  that it will  incur a  material  liability  in  regard to
              possible year 2000 problems from systems  previously sold by Cubic
              Communications.  But no assurance  can be given at this time as to
              the amount,  if any, of the liability  the Company may  ultimately
              sustain in this regard.

              Other  Software  Products - Over the years,  the  Company has been
              associated with a modest number of software products.  A review of
              commercial  products  has  been  completed  for  their  year  2000
              exposure.  The Company  concluded that Year 2000 Issues related to
              these products are minimal and that required  remediation  efforts
              are insignificant.

              The  Company's  program to assess and correct any Year 2000 Issues
              with its products is well  underway,  and upgrade  programs are or
              will be in place during 1999 to coordinate  the efforts  involved.
              Efforts are being coordinated through the Company's normal upgrade
              channels,  and at this  time no  additional  resources  need to be
              assigned to the effort.


              Non-IT Systems

              Non-IT   systems    include    embedded    technology    such   as
              micro-controllers.  The Company's  assessment  indicated  that the
              equipment  utilized  in its  manufacturing  process  is  not  date
              dependent. The Company has assessed the impact of non-IT issues on
              its other office equipment (telephone systems, copiers,  facsimile
              machines,  etc.)  and  facility  infrastructure  for  which  it is
              responsible.  Responses  are being  received  from the  respective
              vendors, and the Company does not expect any significant issues in
              this area.  The Company will continue to assess non-IT systems and
              expects substantial resolution by late summer 1999.

              Business Partners

              Business partners include, but are not limited to: suppliers,  the
              Company's  bank,  insurance  and benefit  providers,  and property
              management  firms.  The  Company's  operations  are  dependent  to
              varying degrees on the readiness of these and other partners.  The
              Company   has   issued   questionnaires   to   or   has   received
              correspondence  from  most of the  currently  identified  business
              partners.  To date, the responses  received  indicate that many of
              the Company's  business partners are actively  addressing the Year
              2000 Issue. The Company is continuing to pursue responses in order
              to  complete  its  evaluation.  By late summer  1999,  the Company
              expects to have  identified  and developed  contingency  plans for
              business  partners that cannot give adequate  assurances that they
              will be year 2000 ready.


              Customers

              The Company is  contacting  its  customers  to assess the state of
              their  readiness  and  the  potential   impact  on  the  Company's
              operations.  The Company's main concern is  principally  with U.S.
              and State and local  government  entities.  The primary concern is
              that there will be delays in  contract  payments  to the  Company,
              which would require a temporary increase in working capital funded
              from  bank  borrowings.  The  Company  has  substantial  borrowing
              capacity available under its current line of credit, which extends
              to June 2000.  The Company will continue to evaluate the cash flow
              impact of Year 2000  Issues  and  develop  additional  contingency
              financing plans, if required.

              The Company  will use both  internal  and  external  resources  to
              ensure  that it is year 2000 ready.  The Company has not  deferred
              any significant information technology projects as a result of the
              year 2000  effort.  The total cost of the program is being  funded
              through  operating cash flows.  The total cost associated with the
              year  2000  effort,   except  for  certain  product  modifications
              discussed  above,  is not expected to be material to the Company's
              consolidated results of operations and financial position.

              Although the Company's  year 2000 efforts are intended to minimize
              the adverse effects of the Year 2000 Issue on the its business and
              operations,  the actual  effects  of the Issue and the  success or
              failure of the Company's  efforts  described above cannot be known
              until the year 2000. Therefore, in the opinion of management,  the
              most reasonable likely worst case scenario is the possibility that
              the Company's  major business  partners,  other  material  service
              providers,   or  customers  will  not  adequately   address  their
              respective  Year 2000  Issues in a timely  manner,  the  effect of
              which  could  have a  material  adverse  effect  on the  Company's
              business, results of operations, and financial condition.

              The Company will be developing  contingency  plans with respect to
              this most likely worst case scenario as additional  information is
              obtained from both  business  partners and  customers.  Such plans
              will not be finalized until late summer 1999 at the earliest.


              QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

              The  Company  is  exposed  to market  risk,  including  changes in
              interest rates and currency  exchange rates. As of April 30, 1999,
              the  Company  had no accounts  receivable  denominated  in foreign
              currencies. The Company's standard terms require foreign customers
              to pay for the  Company's  products with U.S.  dollars.  For those
              orders  denominated in foreign  currencies,  the Company may limit
              its exposure to losses from foreign  currency  transactions by the
              purchase of forward foreign exchange  contracts.  Such activity to
              date has been insignificant.

              The  Company's  interest  rate risk is  limited  to  approximately
              $325,000 of  available-for-sale  investments as of April 30, 1999.
              These  investments  are high-grade  municipal debt securities with
              maturities  from one to five years  which are  subject to interest
              rate fluctuations.

<PAGE>
PART II - OTHER INFORMATION

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

       (a)    Exhibits

              The following exhibits are included herewith:

              ll. Schedule of Computation of Net Income Per Share

       (b)    Reports on Form 8-K

              None.

<PAGE>


                                    SIGNATURE


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 thereunto duly authorized.




                                  COMARCO, Inc.
                        --------------------------------
                                  (Registrant)




June 14, 1999




                         ----------------------------------
                                 Thomas P. Baird
                             Chief Financial Officer
              (Authorized Officer and Principal Financial Officer)