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 October 31, 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 November 30, 1999.

                            Common Stock,
                           $.10 Par Value                   4,285,060 Shares
                           --------------                   ----------------


<PAGE>

Index to Form 10-Q

                                                                     Page No.
                                                                     --------
Part I.        Financial Information


 Condensed Consolidated Balance Sheets
     October 31, 1999 and January 31, 1999                              1

 Condensed Consolidated Statements of Income (Loss)
     Quarters Ended and Three Quarters Ended October 31, 1999
      and October 31, 1998                                              2

 Condensed Consolidated Statements of Cash Flows
     Three Quarters Ended October 31, 1999 and October 31, 1998         3

 Condensed Consolidated Statements of Comprehensive Income (Loss)
     Three Quarters Ended October 31, 1999 and October 31, 1998         4

 Notes to Condensed Consolidated Financial Statements                   5-8

 Management's Discussion and Analysis of Financial
     Condition and Results of Operations                                9-15



 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>


                                                     October 31, 1999           January 31, 1999
ASSETS                                                  (Unaudited)                     *
<S>                                                  <C>                        <C>
Current assets:
         Cash and cash equivalents                   $       2,701,000          $      3,220,000
         Short-term investments                              3,173,000                 2,775,000
         Accounts receivable, net                            9,785,000                11,518,000
         Inventory                                           4,954,000                 4,157,000
         Deferred tax asset                                  2,492,000                 2,112,000
         Net assets available for sale                       9,330,000                10,464,000
         Other current assets                                  465,000                   337,000
                                                     -----------------          ----------------

Total current assets                                        32,900,000                34,583,000

Long-term investments                                             -                      526,000
Property and equipment, net                                  2,456,000                 1,948,000
Software development costs, net                              5,286,000                 4,185,000
Intangible assets, net                                       1,328,000                 1,544,000
Other assets                                                   127,000                    94,000
                                                     -----------------          ----------------

TOTAL ASSETS                                         $      42,097,000          $    42,880,000
                                                     =================          ================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
         Accounts payable                            $         847,000          $        499,000
         Deferred revenue                                    2,871,000                 2,902,000
         Accrued liabilities                                 6,863,000                 6,349,000
                                                     -----------------          ----------------

Total current liabilities                                   10,581,000                 9,750,000

Deferred income taxes                                        2,197,000                 1,928,000
Minority interest                                               38,000                      -
Stockholders' equity:
         Common stock, $.10 par value,
           33,750,000   shares   authorized,
           4,301,560  and  4,456,460  shares
           outstanding at October 31, 1999 and
           January 31, 1999, respectively                      430,000                   446,000
         Capital contributed in excess of par value          3,308,000                 2,795,000
         Other comprehensive income:
           Unrealized investment gains                          16,000                    16,000
         Retained earnings                                  25,527,000                27,945,000
                                                     -----------------          ----------------

Total stockholders' equity                                  29,281,000                31,202,000
                                                     -----------------          ----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $      42,097,000          $     42,880,000
                                                     =================          ================

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>


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

                                                           Quarter Ended                           Three Quarters Ended
                                                           -------------                           ---------------------
                                              October 31, 1999       October 31, 1998       October 31, 1999    October 31, 1998
                                              ----------------       ----------------       ----------------    ----------------
<S>                                         <C>                     <C>                   <C>                     <C>
Revenue:
   Product sales                            $     10,686,000        $      7,076,000      $      25,189,000       $      19,254,000
   Services                                        1,273,000               1,359,000              3,585,000               3,843,000
                                                   ---------               ---------              ---------               ---------
                                                  11,959,000               8,435,000             28,774,000              23,097,000
                                                  ----------               ---------             ----------              ----------
Cost of sales:
   Product sales                                   5,332,000               2,696,000             12,705,000               7,573,000
   Services                                          926,000                 812,000              2,528,000               2,573,000
                                                     -------                 -------              ---------               ---------
                                                   6,258,000               3,508,000             15,233,000              10,146,000
                                                   ---------               ---------             ----------              ----------

Gross profit                                       5,701,000               4,927,000             13,541,000              12,951,000

Selling, general & administrative costs            2,538,000               2,539,000              6,721,000               6,916,000
Engineering and support costs                        848,000                 653,000              2,811,000               2,656,000
                                                     -------                 -------              ---------               ---------

Operating income                                   2,315,000               1,735,000              4,009,000               3,379,000

Net interest income                                   47,000                  40,000                224,000                 253,000
Minority interest in earnings
   of subsidiary                                     (29,000)                      -                (38,000)                  -
                                                     --------              ---------               --------               ---------

Income before income taxes                         2,333,000               1,775,000              4,195,000               3,632,000
Income taxes                                         851,000                 648,000              1,531,000               1,326,000
                                                ------------            ------------          -------------           -------------

Net income from continuing operations              1,482,000               1,127,000             2,664,000                2,306,000

Net income (loss) from discontinued
   operations                                     (1,894,000)                449,000            (1,105,000)               1,391,000
                                                  -----------                -------            -----------               ---------

Net income (loss)                           $       (412,000)       $      1,576,000      $       1,559,000       $       3,697,000
                                            =================       ================      =================       =================


Earnings per share from continuing operations:
   Basic                                              $  .34                  $  .25                 $  .60                  $  .49
                                                      ======                  ======                 ======                  ======

   Diluted                                            $  .31                  $  .23                 $  .54                  $  .44
                                                      ======                  ======                 ======                  ======

Earnings (loss) per share from discontinued operations:
   Basic                                              $ (.43)                 $  .10                 $ (.25)                 $  .30
                                                      ======                  ======                 ======                  ======

   Diluted                                            $ (.42)                 $  .09                 $ (.24)                 $  .29
                                                      ======                  ======                 ======                  ======

Earnings (loss) per share:
   Basic                                              $  (.09)                $  .35                 $  .35                  $  .79
                                                      =======                 ======                 ======                  ======

   Diluted                                            $  (.11)                $  .32                 $  .30                  $  .73
                                                      =======                 ======                 ======                  ======


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

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

                                                                                     Three Quarters Ended

                                                                          October 31, 1999           October 31, 1998
                                                                          ----------------           ----------------
<S>                                                                       <C>                        <C>
Cash flows from operating activities:
    Net income from continuing operations                                 $     2,664,000            $    2,306,000
    Adjustments to reconcile net income from continuing
     operations to net cash provided by operating activities:
       Depreciation and amortization                                            2,283,000                 1,941,000
       Loss (gain) on disposal of property and equipment                           65,000                    (4,000)
       Deferred income taxes                                                     (111,000)                 (302,000)
       Provision for doubtful accounts receivable                                  18,000                    18,000
       Net purchases of trading securities                                       (431,000)                 (576,000)
       Decrease (increase) in accounts receivable                               1,715,000                  (557,000)
       Decrease (increase) in inventory                                          (797,000)                  145,000
       Decrease (increase) in other current assets                               (128,000)                   94,000
       Decrease (increase) in other assets                                        (33,000)                   57,000
       Increase in accounts payable                                               348,000                   130,000
       Increase (decrease) in deferred revenue                                    (31,000)                  272,000
       Increase in accrued liabilities                                            514,000                   632,000
                                                                              -----------                ----------

    Net cash provided by operating activities                                   6,076,000                 4,156,000

Cash flows from investing activities:
    Proceeds from sales and maturities of investments                             559,000                 2,377,000
    Purchases of property and equipment                                        (1,262,000)                 (810,000)
    Proceeds from sales of property and equipment                                   9,000                     4,000
    Software development costs                                                 (2,488,000)               (2,235,000)
    Cost of acquisition of Industrial Technology intellectual property               -                   (1,000,000)
                                                                              -----------               -----------

    Net cash used in investing activities                                      (3,182,000)               (1,664,000)

Cash flows from financing activities:
    Proceeds from issuance of common stock                                        919,000                    63,000
    Purchase of common stock                                                   (4,399,000)               (5,194,000)
                                                                              -----------               -----------

    Net cash used in financing activities                                      (3,480,000)               (5,131,000)
                                                                              -----------               ------------

Net decrease in cash and cash equivalents - continuing operations              (2,212,000)               (2,639,000)

Net increase (decrease) in cash and cash equivalents -
    discontinued operations                                                      1,693,000               (1,010,000)
                                                                              ------------              -----------

Net decrease in cash and cash equivalents                                 $      (519,000)           $   (3,649,000)
                                                                          ================           ==============


Supplemental  disclosures of cash flow  information:
  Cash paid during the three
    quarters for:
       Interest                                                           $             -            $            -
       Income taxes                                                             3,235,000                 2,345,000

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

                         COMARCO, Inc. and Subsidiaries
        Condensed Consolidated Statements of Comprehensive Income (Loss)
                                   (Unaudited)

<TABLE>

                                                        Quarter Ended                              Three Quarters Ended
                                                        -------------                              --------------------

                                            October 31, 1999       October 31, 1998    October 31, 1999      October 31, 1998
                                            ----------------       ----------------    ----------------      ----------------
  <S>                                       <C>                    <C>                 <C>                   <C>
  Net income (loss)                         $       (412,000)      $      1,576,000    $      1,559,000      $      3,697,000

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

  Comprehensive income (loss)               $       (412,000)      $      1,576,000    $      1,559,000      $      3,697,000
                                            ================       ================    ================      ================


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

















<PAGE>
                         COMARCO, Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements
             October 31, 1999, January 31, 1999 and October 31,1998
                                   (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 October 31, 1999 and
       January 31, 1999,  the results of its  operations  for the quarters ended
       and three  quarters  ended October 31, 1999 and October 31, 1998, and its
       cash flows for the three  quarters ended October 31, 1999 and October 31,
       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 and three
       quarters  ended  October 31, 1999 are not  necessarily  indicative of the
       results to be obtained for the full fiscal year.


2.     Divestiture Plan

       In July 1999,  the Company  announced  that it was embarking on a plan to
       strengthen the Company's  focus on the wireless  communications  products
       and service  business area.  This plan,  which was formalized  during the
       quarter   ended  October  31,  1999,   involves   selling  the  Company's
       information technology and staffing services segment's product lines. The
       Company has  retained  the services of two  investment  banking  firms to
       assist in the sale of these  product  lines.  Accordingly,  the financial
       results of this segment are reported as  discontinued  operations.  Prior
       periods'   results   have  been   restated  to  conform  to  the  current
       presentation.   Total  revenues  and  operating   income  (loss)  of  the
       information  technology and staffing  services segment were $39.9 million
       and  ($1.7)   million  for  the  nine  months  ended  October  31,  1999,
       respectively,  and $44.9  million  and $2.4  million  for the nine months
       ended October 31, 1998,  respectively.  The Company currently expects the
       marketing  and selling  process to take a minimum of six to nine  months,
       and there can be no assurance that all of the information  technology and
       staffing  services  segment's  product  lines  can be sold to a single or
       multiple buyers at acceptable valuations.

       Due  to  the  divestiture  plan  and  the  resulting   classification  of
       operations into continuing and discontinued  components,  segment data is
       not provided.


3.     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  effect 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                                Three Quarters Ended
                                                       -------------                                --------------------
                                            October 31, 1999        October 31, 1998        October 31, 1999       October 31, 1998
                                            ----------------        ----------------        ----------------       ----------------
         <S>                                <C>                      <C>                    <C>                    <C>
         Basic:

         Net income from
            continuing operations           $     1,482,000          $     1,127,000        $      2,664,000       $     2,306,000
         Weighted average shares
           outstanding                            4,360,000                4,562,000               4,404,000             4,664,000
                                               ------------                ---------              ----------            ----------

         Basic income per share             $           .34          $           .25        $            .60       $           .49
                                            ===============          ===============        ================       ===============

         Net income (loss) from
            discontinued operations         $    (1,894,000)         $       449,000        $     (1,105,000)      $     1,391,000
         Weighted average shares
           outstanding                            4,360,000                4,562,000               4,404,000             4,664,000
                                               ------------                ---------              ----------            ----------

         Basic income (loss) per share      $          (.43)         $           .10        $           (.25)      $           .30
                                            ===============          ===============        =================      ===============

         Net income (loss)                  $      (412,000)         $     1,576,000        $      1,559,000       $     3,697,000
         Weighted average shares
           outstanding                            4,360,000                4,562,000               4,404,000             4,664,000
                                                  ---------                ---------               ---------            ----------

         Basic income (loss) per share      $          (.09)         $           .35        $            .35       $           .79
                                            ===============          ===============        ================       ===============

         Diluted:

         Net income from
            continuing operations           $     1,482,000          $     1,127,000        $      2,664,000       $     2,306,000
         Less - net income allocated
           to subsidiary dilutive stock
           options outstanding                      (84,000)                 (71,000)               (162,000)             (145,000)
                                                 -----------            -------------       ----------------             ---------

         Net income used in calculation
           of diluted income per share
            from continuing operations      $     1,398,000          $     1,056,000        $      2,502,000       $     2,161,000
                                            ===============         ================        ================       ===============


         Weighted average shares
           outstanding                            4,360,000                4,562,000               4,404,000             4,664,000
         Plus - common equivalent shares
           (determined using the "treasury
           stock" method) representing
           shares issuable upon exercise
           of stock options                         156,000                  188,000                 182,000               200,000
                                                 ----------               ----------              ----------             ---------

         Weighted average number
           of shares used in calculation
           of diluted income per share
           from continuing operations             4,516,000                4,750,000               4,586,000             4,864,000
                                             ==============              ===========             ===========           ===========

         Diluted income per share
             from continuing operations      $          .31          $           .23         $           .54       $           .44
                                             ==============          ===============         ===============       ===============

         Net income (loss) from
           discontinued operations          $   (1,894,000)          $       449,000        $     (1,105,000)      $     1,391,000
         Less - net income allocated
           to subsidiary dilutive stock
           options outstanding                        -                         -                     -                         -
                                             ---------------          --------------        ----------------       ---------------

         Net income (loss) used in
           calculation of diluted income
           (loss) per share from
           discontinued operations          $   (1,894,000)          $       449,000        $     (1,105,000)      $     1,391,000
                                            ==============           ===============         ===============       ===============

         Weighted average shares
           outstanding                            4,360,000                4,562,000               4,404,000             4,664,000
         Plus - common equivalent shares
           (determined using the "treasury
           stock" method) representing
           shares issuable upon exercise
           of stock options                         156,000                  188,000                 182,000               200,000
                                                 ----------               ----------              ----------             ---------
         Weighted average number
          of shares used in calculation
          of diluted income(loss) per
          share from discontinued
          operations                              4,516,000                4,750,000               4,586,000             4,864,000
                                            ===============              ===========             ===========           ===========

         Diluted income (loss) per share
           from discontinued operations     $          (.42)         $           .09        $           (.24)      $           .29
                                            ===============          ===============        ================       ===============



         Net income (loss)                  $      (412,000)         $     1,576,000        $      1,559,000       $     3,697,000
         Less - net income allocated
           to subsidiary dilutive stock
           options outstanding                      (84,000)                 (71,000)               (162,000)             (145,000)
                                                 -----------            -------------        ----------------            ---------

         Net income (loss) used in
           calculation of diluted income
           (loss) per share                 $      (496,000)         $     1,505,000        $      1,397,000       $     3,552,000
                                            ===============          ===============        ================       ===============

         Weighted average shares
           outstanding                            4,360,000                4,562,000               4,404,000             4,664,000
         Plus - common equivalent shares
           (determined using the "treasury
           stock" method) representing
           shares issuable upon exercise
           of stock options                         156,000                  188,000                 182,000               200,000
                                                 ----------               ----------              ----------             ---------
         Weighted average number of
          shares used in calculation of
          diluted income (loss) per share         4,516,000                4,750,000               4,586,000             4,864,000
                                            ===============          ===============        ================       ===============


         Diluted income (loss) per share    $          (.11)         $           .32        $            .30       $           .73
                                            ===============          ===============        ================       ===============
</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.

       As part of its  discontinued  operations,  the Company  has a  multi-year
       fixed  price  contract  for  which  it  has  been  negotiating   contract
       modifications. The Company submitted a request to the U.S. Government for
       additional   funding  of  approximately   $5.7  million  and  a  30-month
       extension.  The Company  received a  modification  in late  September  in
       partial  settlement of the Company's  request,  providing funding of $1.9
       million  and a 16-month  extension.  An  additional  $2.0  million  and a
       nine-month  extension have been  negotiated but have not yet been reduced
       to a formal contract modification and funding appropriation. Negotiations
       are  continuing  for up to an  additional  $1.5  million and a five-month
       extension.  The Company's request for additional  funding and performance
       period was due to U.S. Government delays in providing required equipment.
       The Company believes that it continues to have a meritorious  position on
       remaining  open items.  If  necessary,  the  Company  intends to seek all
       remedies available under Federal  procurement laws. No reserves have been
       recorded on this  contract  at this time since  management  believes  the
       Company will be successful in resolving the remaining open issues.

       Additionally,  as part of its discontinued operations, the Company has an
       unresolved dispute on two fixed price contracts with one customer. During
       the quarter  ended  October 31, 1999,  the Company  recorded a reserve of
       approximately  $2.9 million  related to these  contracts.  Management  is
       working with the customer to have the  contracts  terminated.  Management
       believes  that the  reserves  established  are  sufficient  to cover  the
       outstanding  issues  on  these  contracts.  The  reserve  includes  costs
       estimated to be incurred to terminate the contracts,  including severance
       and facility costs.

       Management  believes  that the above  contingencies  will not prevent the
       selling of the discontinued segment.


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.
              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.


              Divestiture Plan

              In July 1999,  the Company  announced  that it was  embarking on a
              plan  to   strengthen   the   Company's   focus  on  the  wireless
              communications  products  and service  business  area.  This plan,
              which was  formalized  during the quarter  ended October 31, 1999,
              involves selling the Company's information technology and staffing
              services  segment's  product  lines.  The Company has retained the
              services of two investment  banking firms to assist in the sale of
              these product lines.  Accordingly,  the financial  results of this
              segment are reported as  discontinued  operations.  Total revenues
              and operating  income  (loss) of the  information  technology  and
              staffing  services  segment were $39.9 million and ($1.7)  million
              for the nine months  ended  October 31,  1999,  respectively,  and
              $44.9  million and $2.4 million for the nine months ended  October
              31,  1998,   respectively.   The  Company  currently  expects  the
              marketing  and  selling  process  to take a minimum of six to nine
              months,  and there can be no assurance that all of the information
              technology and staffing  services  segment's  product lines can be
              sold to a single or multiple buyers at acceptable valuations.


(a)           Results of Operations

              The  Company  expects  a  rapid   proliferation  of  portable  and
              stationary computing and communication systems and appliances that
              are  connected  by wireless  communication  networks to the public
              internet, private intranets,  private local area networks, servers
              and other  terminal  devices.  The Company  provides  products and
              services  for  these   markets  and  the  Company  is   developing
              strategies and plans to provide  additional  products and services
              to end-users and network operators. Based on its current strategy,
              the Company  forecasts that a growing  fraction of its revenue and
              profit will come from services in the future.


              Continuing Operations

              During the third quarter of Fiscal Year 2000 (year ending  January
              31, 2000),  the Company  recorded  product sales revenues of $10.7
              million,  up 51% from the product  sales  revenues of $7.1 million
              for the  comparable  period of the prior  fiscal  year.  Increased
              third quarter to third quarter product sales revenues is primarily
              due  to the  Company's  performance  under  upgrade  programs  for
              various California  customers' wireless motorist aid systems,  and
              continued  market  trial sales of the  Company's  universal  power
              adapters  for  wireless  communication   devices.   Product  sales
              revenues for the first three quarters of Fiscal Year 2000 of $25.2
              million were up 31% from $19.3 million for the  comparable  period
              of the prior fiscal year.  Increased  year-to-year  product  sales
              revenues were primarily due to the upgrade contracts and the sales
              of the universal power adapter for wireless  communication devices
              mentioned  above,  along with a slight  reduction  in sales of its
              test and  measurement  systems  to major  cellular  carriers.  The
              Company  currently  expects  that sales of wireless  motorist  aid
              systems will return to historical levels in Fiscal Year 2001.

              Service sales revenues totalled $1.3 million for the quarter ended
              October 31, 1999,  down marginally from the same period last year.
              Service sales revenues were $3.6 million for the three quarters of
              Fiscal Year 2000,  compared  with $3.8 million for the  comparable
              period  of  the  prior  fiscal  year.  Services  revenues'  slight
              reductions were due to good weather conditions in California which
              lower the need for replacement parts. The Company expects services
              revenues to resume  growth in the fourth  quarter and beyond as it
              offers its wireless  information service to additional segments of
              the wireless communications industry.

              Cost of  product  sales was 50% of product  revenues  in the third
              quarter of Fiscal Year 2000 compared with 38% of product  revenues
              for the  comparable  period  of the  prior  fiscal  year.  Cost of
              product  sales for the first  three  quarters  of this Fiscal Year
              2000  was  50% of  product  revenues  compared  with  39%  for the
              comparable  period of the prior fiscal year.  The increase in cost
              of product sales  percentage of revenue  period over period is due
              to the shift in product  mix caused by the upgrade  contracts  and
              market trial sales of universal power adapters mentioned above.

              Cost of service  sales are $.9  million  for the third  quarter of
              Fiscal Year 2000  compared  with $.8  million  for the  comparable
              period  of the prior  fiscal  year.  Year to date cost of  service
              sales  is  $2.5  million   compared  with  $2.6  million  for  the
              comparable  period of the prior fiscal year. Third quarter results
              included the startup costs of initial contracts in the information
              analysis services business for major cellular carriers.

              Gross profit totalled $5.7 million for the third quarter of Fiscal
              Year  2000,  up 16% from $4.9  million  for the third  quarter  of
              Fiscal Year 1999.  Gross  profit for the first  three  quarters of
              Fiscal Year 2000 is $13.5  million,  up 4% from $13.0  million for
              the  comparable  period of the prior fiscal year. The gross profit
              percentage  growth is lower than the  overall  revenue  percentage
              growth because of lower  contributions  from the upgrade contracts
              for wireless  motorist aid systems and universal power adapter for
              wireless   communication  devices  mentioned  above.  The  Company
              expects to complete the current  contracts  for wireless  motorist
              aid systems during the current fiscal year.

              Selling,  general and administrative  costs were unchanged for the
              third quarter of Fiscal Year 2000 from the third quarter of Fiscal
              Year 1999. Selling, general and administrative costs for the first
              three  quarters of Fiscal Year 2000 of $6.7  million were down $.2
              million,  or 2.9%, from $6.9 million for the comparable  period of
              the prior fiscal year.  The slight change in selling,  general and
              administrative costs is due to reductions in international selling
              expenses as a result of  restructuring  that was completed  during
              Fiscal Year 1999.

              Engineering and support costs of $848,000 for the third quarter of
              Fiscal Year 2000 were up $195,000,  or 29.9% from $653,000 for the
              third quarter of Fiscal Year 1999.  Engineering  and support costs
              for the first three  quarters of Fiscal Year 2000 of $2.8  million
              were up $.1 million,  or 3.7% from $2.7 million for the comparable
              period of the prior fiscal year. The increase period to period are
              due to the Company's continued investment in engineering talent to
              support its new product releases.

              Operating  income as a  percentage  of revenues  was 19.4% for the
              third  quarter  of Fiscal  Year  2000,  compared  to 20.6% for the
              comparable period of the prior fiscal year.  Operating income as a
              percentage  of revenues was 13.9% for the first three  quarters of
              Fiscal Year 2000,  compared to 14.6% for the comparable  period of
              the prior fiscal year.  These  decreases were primarily due to the
              lower gross  income due to a larger mix of upgrade  contracts  for
              wireless  motorist aid systems and the universal power adapter for
              wireless  communication  devices  than in the prior  year's  first
              three quarters, as discussed above.

              Net interest income  (interest  income less interest  expense) for
              the third  quarter of Fiscal Year 2000  amounted  to  $47,000,  as
              compared to $40,000 for the comparable  period of the prior fiscal
              year.  Net interest  income for the first three quarters of Fiscal
              Year 2000  amounted to  $224,000,  as compared to $253,000 for the
              comparable period of the prior fiscal year.

              The Company's  effective tax rate for the first three  quarters of
              Fiscal Year 2000 is 36.5%,  the same as the  comparable  period of
              the prior fiscal year.

              Net income  from  continuing  operations  of $1.5  million for the
              third  quarter  of Fiscal  Year 2000 is up $.4  million  from $1.1
              million for the  comparable  period of the prior year.  Net income
              from  continuing  operations  of $2.7  million for the first three
              quarters of Fiscal Year 2000 is up $.4 million  from $2.3  million
              for the comparable period of the prior year.

              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  $2,488,000  and  $2,235,000,   respectively,
              during the first  three  quarters  of Fiscal  Years 2000 and 1999,
              respectively.  Corresponding amounts amortized were $1,387,000 and
              $1,202,000,  in the first  three  quarters of Fiscal Year 2000 and
              1999, respectively.

              The Company's  future wireless  products  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 and
              services  totalled  $9.9  million for the third  quarter of Fiscal
              Year 2000, up from $9.5 million from the comparable  prior period.
              For the  twelve-month  periods  ended  October  31, 1999 and 1998,
              orders   received   were   $37.7   million   and  $27.3   million,
              respectively.  Because of the long sales cycle involved in selling
              the Company's wireless products and services and the high contract
              value of each  order,  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,  including  deferred revenue for outstanding post
              contract support and extended warranty  obligations at October 31,
              1999 totalled $14.8 million.

              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  conducting  its
              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 a single or a limited number of suppliers,
              and the  inability by any of these  suppliers  to fulfill  Company
              requirements  may result in an interruption of production.  Access
              to 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
              patents,  trade secrets,  copyrights,  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.


              Discontinued Operations

              The  loss  from   discontinued   operations   resulted   from  the
              establishment  of a $2.9 million  reserve in the third  quarter of
              Fiscal Year 2000 on two fixed price contracts that the Company has
              with one customer. Management is working with the customer to have
              the contracts  terminated.  Management  believes that the reserves
              established  are  sufficient  to cover the  outstanding  issues on
              these  contracts.  The  reserve  includes  costs  estimated  to be
              incurred to  terminate  the  contracts,  including  severance  and
              facility costs. Management believes that this contingency will not
              prevent the selling of the discontinued segment.


       (b)    Financial Condition

              The  Company  signed  a  loan  agreement  with  a  bank  effective
              September 26, 1994,  which was amended  effective August 21, 1998.
              The loan  agreement  consists  of a $10 million  revolving  credit
              facility,  which  expires  June 30, 2000.  The 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 $6.6 million  (includes highly liquid long-term
              investments  with  maturities  of 12 to 36  months,  and  excludes
              investments  in  the  Company's  deferred  compensation  plan  for
              executives)  during the first three  quarters of Fiscal Year 2000,
              but  have  declined  to  $2.8  million  as of  October  31,  1999,
              principally  due  to  the  Company's  stock  re-purchase  program.
              Therefore,  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 three quarters of Fiscal Year 2000, the Company's
              average  days'  sales  in  accounts   receivable  have  decreased,
              primarily due to  collections  from several  significant  wireless
              communications products customers.

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

                                          October 31, 1999         January 31, 1999
                                          ----------------         ----------------
              <S>                         <C>                      <C>
              Current ratio                           3.11                     3.55
              Working capital             $     22,319,000         $     24,833,000
              Book value per share                   $6.81                    $7.00
</TABLE>

              The   decreases  in  the  above  factors  are  due  to  the  stock
              re-purchases  of  approximately  $4.4  million in the first  three
              quarters of Fiscal Year 2000, as well as the fixed price contracts
              reserve  established in discontinued  operations  during the third
              quarter of Fiscal Year 2000.

              The Company has a significant  commitment for capital expenditures
              at October 31, 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 and
              services business in accordance with Financial Accounting Standard
              No. 86,  Accounting for the Costs of Computer Software to be Sold,
              Leased, or Otherwise Marketed,  totaled $2,488,000 and $1,387,000,
              respectively, in the first three quarters of Fiscal Year 2000.

              The  Company's   Board  of  Directors   has   authorized  a  stock
              re-purchase  program of up to 2,000,000  shares. As of October 31,
              1999,  the Company  has  re-purchased  and  retired  approximately
              1,433,000 shares, of which 223,000 shares with a purchase price of
              $4,399,000  were  purchased in the first three  quarters 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
              $10.94.

              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 in use by businesses
              and  government  organizations  were 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 have
              assessed  the  impact  of the Year  2000  Issue  on the  Company's
              products and services.

              The Company  established a two-phase  program to complete its year
              2000 efforts.  The first phase included planning,  inventory,  and
              assessment;  the final phase  consisted  of  correction,  testing,
              deployment,  and acceptance.  The Company 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  completed its
              inventory of computers and computer peripheral  equipment.  It was
              determined  that a few older  units were not year 2000  compliant,
              and these units were  replaced as part of the regular  replacement
              program  this year.  Remediation  efforts on the  readiness of the
              Company's internal information systems have been completed.


              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  systems - Most software  programs have been
              determined  to  be  year  2000  compliant.   For  those  requiring
              remediation, a detailed upgrade program was submitted to customers
              over a year ago, and the effort has been  coordinated  through the
              Company's normal upgrade  program.  The Company believes that this
              process is substantially completed.

              Wireless  motorist aid callbox  systems - The technology  acquired
              from  GTE  has  been  determined  to be  substantially  year  2000
              compliant. Changes required were minimal. The Company has assessed
              the year 2000  reliability of the  technology  acquired from Cubic
              Communications  and  determined  that some problems  existed.  The
              entire  installed  base  that  the  Company  acquired  from  Cubic
              Communications  is in the process of being upgraded.  The upgrades
              will be  substantially  completed by December 31, 1999, which will
              eliminate any potential  Year 2000 Issue for these  callboxes.  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.

              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 completed.


              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  have been  received  from the  respective
              vendors, and the Company believes that all significant issues have
              been resolved.


              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.  The  responses  received  indicate  that  many  of  the
              Company's business partners are actively  addressing the Year 2000
              Issue  and are or will be Year 2000  compliant.  The  Company  has
              identified and developed  contingency  plans for business partners
              that cannot give adequate  assurances  that they will be year 2000
              ready.


              Customers

              The Company has  contacted  its  customers  to assess the state of
              their  readiness  and  its  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  has used 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 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  did  not   adequately   address  their
              respective  Year 2000 Issues in a timely  manner,  even though the
              Company has received general or specific assurances, the effect of
              which  could  have a  material  adverse  effect  on the  Company's
              business,  results of  operations,  and financial  condition.  The
              Company has developed  overall  contingency  plans with respect to
              this most likely worst case scenario.


              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 October 31,
              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 in the past was  limited  to a
              minor amount of available-for-sale  investments; these investments
              were  sold  during  the  quarter  ended  October  31,  1999,   and
              therefore, the interest rate risk was eliminated.

<PAGE>

PART II - OTHER INFORMATION


ITEM 5.       OTHER INFORMATION

              The  Securities  and Exchange  Commission  has amended Rule 14a-4,
              which governs the use of discretionary proxy voting authority with
              respect to a  shareholder  proposal that the  shareholder  has not
              sought to include in the proxy  statement  pursuant to Rule 14a-8.
              Rule 14a-4(c)(1) now sets a 45 day advance notice requirement.  If
              a shareholder  fails to notify the Company of his or her intention
              to present a proposal at the meeting at least 45 days prior to the
              month and day on which the prior year's proxy  statement was first
              mailed,  then the  holders  of proxies  solicited  by the Board of
              Directors may use their  discretionary  voting  authority when the
              proposal  is raised at the  Company's  Annual  Meeting.  The proxy
              holders will have such  discretionary  authority even if the proxy
              statement  contained no  discussion  of the proposal and the proxy
              holders' intentions with respect thereto.

              In the case of COMARCO,  Inc.,  April 5, 2000 is the  deadline for
              shareholders  to give such notice with respect to a proposal  that
              is not sought to be included in the Company's proxy statement with
              respect  to the 2000  Annual  Meeting.  As has been the case,  any
              shareholder  who  wishes  to  have  a  proposal  included  in  the
              Company's  proxy  statement for its 2000 Annual  Meeting (which in
              all cases  will be  subject to the rules  regarding  whether  such
              proposal may be excluded notwithstanding the request), must notify
              COMARCO pursuant to Rule 14-8 not later than January 21, 2000.


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)




December 15, 1999




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