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, 1997                 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)

22800 Savi Ranch Parkway, Suite 214, Yorba Linda, California        92887-1299
------------------------------------------------------------        -----------
  (Address of principal executive office)                           (Zip Code)

Registrant's telephone number, including area code               (714) 282-3832
                                                                 --------------


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, 1997.

                     Common Stock,
                    $.10 Par Value                   4,762,459 Shares
                    --------------                   ----------------


<PAGE>

Index to Form 10-Q

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


Condensed Consolidated Balance Sheets
    April 30, 1997 and January 31, 1997                               1

Condensed Consolidated Statements of Income
    Quarters ended April 30, 1997 and April 30, 1996                  2

Condensed Consolidated Statements of Cash Flows
    Quarters ended April 30, 1997 and April 30, 1996                  3

Notes to Condensed Consolidated Financial Statements                  4

Management's Discussion and Analysis of Financial
    Condition and Results of Operations                             5-8



 PART II.       OTHER INFORMATION

Item 6.     Exhibits and Reports on Form 8-K                         9

Signature                                                           10


<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
<TABLE>

                                    COMARCO, Inc. and Subsidiaries
                                  Condensed Consolidated Balance Sheets

                                                     April 30, 1997             January 31, 1997
ASSETS                                                (Unaudited)                     *
<S>                                               <C>                        <C>                         
Current assets:
         Cash and cash equivalents                $       7,418,000          $     12,711,000
         Short-term investments                           1,528,000                 1,824,000
         Accounts receivable, net                        13,592,000                11,526,000
         Inventory                                        3,903,000                 3,042,000
         Other current assets                             2,388,000                 2,257,000
                                                  -----------------          ----------------

Total current assets                                     28,829,000                31,360,000

Long-term investments                                     3,063,000                 1,859,000
Property and equipment, net                               1,789,000                 1,408,000
Software development costs, net                           2,611,000                 2,434,000
Intangible assets, net                                    2,786,000                 1,842,000
Other assets                                                482,000                   307,000
                                                  -----------------          ----------------

TOTAL ASSETS                                      $      39,560,000          $    39,210,000
                                                  =================          ===============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
         Accounts payable                         $         413,000          $        217,000
         Deferred revenue                                 2,724,000                 2,678,000
         Accrued liabilities                              7,631,000                 8,036,000
                                                  -----------------          ----------------

Total current liabilities                                10,768,000                10,931,000

Deferred income taxes                                     1,302,000                 1,302,000

Stockholders' equity:
         Common stock, $.10 par value,
           33,705,000 shares authorized,
           4,762,459 and 4,777,959 shares
           outstanding at April 30, 1997 and
           January 31, 1997, respectively                   476,000                   478,000
         Capital contributed in excess
           of par value                                   3,856,000                 4,450,000
         Retained earnings                               23,158,000                22,049,000
                                                  -----------------          ----------------

Total stockholders' equity                               27,490,000                26,977,000
                                                  -----------------          ----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $      39,560,000          $     39,210,000
                                                  =================          ================

See accompanying notes to the condensed consolidated financial statements.

*The  condensed  consolidated  balance  sheet as of  January  31,  1997 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, 1997              April 30, 1996
                                       --------------              --------------
<S>                               <C>                          <C>
Revenues:
   Contract revenues              $       13,922,000           $       11,952,000
   Product sales                           6,175,000                    4,456,000
                                           ---------                    ---------
                                          20,097,000                   16,408,000
                                          ----------                   ----------

Direct costs:
   Contract costs                          9,574,000                    8,385,000
   Cost of product sales                   2,670,000                    1,550,000
                                           ---------                    ---------
                                          12,244,000                    9,935,000

Indirect costs                             6,200,000                    4,848,000
                                           ---------                    ---------

                                          18,444,000                   14,783,000
                                          ----------                   ----------

Operating income                           1,653,000                    1,625,000

Net interest income                          135,000                      153,000
                                          ----------                   ----------

Income before income taxes                 1,788,000                    1,778,000

Income taxes                                 679,000                      676,000
                                          ----------                   ----------

Net income                        $        1,109,000           $        1,102,000
                                  ==================           ==================

Earnings per share
   Primary                        $              .21             $            .21
                                  ==================             ================


Fully  diluted  earnings  per  share  has not been  presented  as the  effect is
immaterial.


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, 1997              April 30, 1996
                                                           --------------              --------------
<S>                                                          <C>                        <C>
Cash flows from operating activities:
    Net income                                               $       1,109,000          $     1,102,000
    Adjustments to reconcile net income to net
     cash used in operating activities:
       Depreciation and amortization                                   533,000                  586,000
       Provision for doubtful accounts receivable                       10,000                    9,000
       Net purchases of trading securities                            (168,000)                (555,000)
       Increase in accounts receivable                              (2,076,000)                (393,000)
       Increase in inventory                                          (300,000)                (376,000)
       Increase in other current assets                               (131,000)                (181,000)
       Decrease (increase) in other assets                            (175,000)                  20,000
       Increase (decrease) in accounts payable                         196,000                 (355,000)
       Increase in deferred revenue                                     46,000                   33,000
       Decrease in other current liabilities                          (405,000)                (443,000)
                                                             ------------------         -----------------

    Net cash used in operating activities                           (1,361,000)                (553,000)

Cash flows from investing activities:
    Purchases of investments                                        (1,204,000)              (1,024,000)
    Sales of investments                                               464,000                1,509,000
    Purchases of property and equipment                               (408,000)                (201,000)
    Software development costs                                        (468,000)                (401,000)
    Cost of acquisition of Cubic, net of cash acquired              (1,720,000)                      -
                                                             ------------------          ---------------

    Net cash used in investing activities                           (3,336,000)                (117,000)

Cash flows from financing activities:
    Proceeds from issuance of common stock                              97,000                  101,000
    Purchase of common stock                                          (693,000)                     -
                                                             ------------------          ---------------

    Net cash provided (used) by financing activities                  (596,000)                 101,000
                                                             ------------------         ----------------

Net decrease in cash and cash equivalents                    $      (5,293,000)         $      (569,000)
                                                             ==================         ================


Supplemental disclosures of cash flow information:  Cash paid during the quarter
    for:
       Interest                                              $             -            $             -
       Income taxes                                                    10,000                      2,000


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


<PAGE>
                         COMARCO, Inc. and Subsidiaries
              Notes to Condensed Consolidated Financial Statements
                        April 30, 1997 and April 30,1996
                                   (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, 1997 and
       January 31, 1997 and the results of its operations and cash flows for the
       quarters  ended April 30, 1997 and April 30, 1996.  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,  1997  are  not  necessarily
       indicative of the results to be obtained for the full fiscal year.

2.     Asset Acquisitions

       The Condensed  Consolidated  Balance Sheet includes the callbox assets of
       Cubic  Communications,  Inc., acquired by Comarco Wireless  Technologies,
       Inc., a subsidiary of the Company,  in February  1997,  and the Condensed
       Consolidated  Statement of Income includes Cubic callbox operations since
       February  1,  1997.  The  acquisition  has been  accounted  for using the
       purchase method of accounting,  and  accordingly,  the purchase price was
       allocated  to  the  acquired  share  of  the  tangible  and  identifiable
       intangible assets and assumed  liabilities based on their respective fair
       values.

3.     Significant Accounting Policies - Per Share Information

       The outstanding  shares used for earnings per share  calculations for all
       years presented  include the weighted average effect of common shares and
       common  share  equivalents  outstanding  during  the year.  Common  share
       equivalents  include  dilutive stock options  computed using the treasury
       stock  method.  Consolidated  net income of the Company used for 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.  Primary earnings per share is calculated as
       follows:
<TABLE>
                                                                Quarter Ended
                                                 April 30, 1997             April 30, 1996
                                                 --------------             --------------
         <S>                                      <C>                       <C>
         Net income                                  $ 1,109,000               $ 1,102,000
         less - net income
           allocated to subsidiary
           dilutive stock options
           outstanding                                  (62,000)                   (53,000)
                                                    ------------              -------------
         Net income used in
           calculation of primary
           income per share                       $    1,047,000             $   1,049,000
                                                  ==============              =============
         Weighted average number
           of common shares used in
           calculation of primary
           income per share                            5,093,000                 5,081,000
                                                    ============                 =========
       Primary income per
           common share                               $      .21                $      .21
                                                      ==========                ==========
</TABLE>
<PAGE>

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


              This  quarterly  report  on  Form  10-Q  contains  forward-looking
              statements  within the  meaning of Section  27A of the  Securities
              Exchange Act of 1934. These are in paragraphs 12,14,15,17,19,  23,
              25, and 26 of  Management's  Discussion and Analysis of Results of
              Operations and Financial Condition.  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, 1997.

       (a)    Results of Operations

              During the first quarter of Fiscal Year 1998 (year ending  January
              31, 1998),  the Company  recorded total revenues of $20.1 million,
              up 22.6% from the  revenues of $16.4  million  for the  comparable
              period of a year  earlier.  Increased  year-to-year  revenues  are
              primarily due to:

              o  sales of the Company's wireless communications products, 
                 including various field measurement and revenue assurance 
                 systems to major cellular telephone carriers;

              o  acquisitions  as of October 1, 1996 and February 5, 1997  of
                 cellular  callbox  product  lines  from  GTE  and  Cubic
                 Communications, respectively; and

              o  acquisition as of August 1, 1996 of a commercial outsourced
                 staffing company.

              Total  direct  costs of $12.2  million  for the first  quarter  of
              Fiscal Year 1998 are up 2.3 million,  or 23.2%,  from $9.9 million
              for the first quarter of Fiscal Year 1997.  The increase is due to
              the  on-going  costs   contributed  by  the  acquisitions  of  the
              commercial  outsourced  staffing  company and the cellular callbox
              product  lines,  as  well  as  costs  to add  additional  wireless
              communications  products  business  capacity in a new, larger U.S.
              facility to support future higher anticipated sales levels.

              Total  indirect  costs of $6.2  million  for the first  quarter of
              Fiscal Year 1998 are up $1.4 million,  or 29.2%, from $4.8 million
              for the first  quarter of Fiscal Year 1997.  The  increase is also
              related to the commercial  outsourced staffing and callbox product
              line  acquisitions,  as well as increased  costs from expansion in
              the  wireless  communications  products  business,  including  the
              establishment of two international sales offices.

              Net interest income  (interest  income less interest  expense) for
              the first  quarter of Fiscal Year 1998  amounted to  $135,000,  as
              compared to $153,000 for the comparable period of the prior fiscal
              year.  The  decrease  is  principally  due  a  reduction  in  cash
              available to invest over the current  year's first  quarter,  as a
              result of funding the wireless  communications  products expansion
              and the Cubic callbox  product line  acquisition,  as well as cash
              used to re-purchase Company common stock.

              The  Company's  effective tax rate for the first quarter of Fiscal
              Year 1998 is 38%, the same as the  comparable  period of the prior
              fiscal year.

              Net income of $1.1  million  for the first  quarter of Fiscal Year
              1998 is  unchanged  from the  comparable  period of the prior year
              primarily due to the  additional  costs  incurred for the wireless
              communications products expansion offsetting the increased revenue
              for the period.


              Wireless Communications Products

              Wireless  communications products revenues increased 46.3% to $6.0
              million  for the  first  quarter  of  Fiscal  Year  1998 from $4.1
              million for the comparable  period of the prior fiscal year.  This
              increase  is  due  to  increased  sales  of  the  Company's  field
              measurement  systems  and  revenue  assurance  systems  for  major
              cellular  telephone  carriers and the  acquisition  of the callbox
              product lines from GTE and Cubic  Communications.  The Company has
              continued  to broaden its product  line with the  introduction  of
              field measurement equipment, including products supporting the GSM
              and CDMA air  interfaces.  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, 1997             April 30, 1996
                                                       --------------             --------------
                        <S>                                 <C>                       <C> 
                        Revenues                            $6,018,000                $4,058,000
                        Cost of product sales                2,594,000                 1,504,000
                                                             ---------                 ---------

                        Gross income                         3,424,000                 2,554,000
                        Gross income percentage               56.9%                       62.9%

                        Indirect costs*                      2,295,000                 1,452,000
                                                             ---------                 ---------

                        Operating income                    $1,129,000                $1,102,000
                                                            ==========                ==========
</TABLE>

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

              The  decreased  gross income  percentage  is due to the  increased
              costs   incurred  to  increase   the   capacity  of  the  wireless
              communications   products  business,   which  included  additional
              staffing,   moving  to  a  larger  facility  in  California,   and
              associated  costs  to  support  future  anticipated  higher  sales
              levels. If the increased  forecast sales levels  materialize,  the
              Company would expect the Company's gross income percentage to move
              back toward historical  levels,  though there can be no assurances
              in that regard.

              The increase in indirect  costs of 58.1% for the first  quarter of
              Fiscal Year 1998 over the  comparable  period of the prior  fiscal
              year is a result of the  increase  in  revenues,  as well as costs
              incurred  to  establish  two  international  sales  offices and an
              increase in research and development  expenses.  Selling,  general
              and  administrative  expenses increased 56.4% to $1.8 million from
              the first  quarter  of Fiscal  Year 1997 to the first  quarter  of
              Fiscal  Year  1998,   while  research  and  development   expenses
              increased  64.4% to $485,000 from the first quarter of Fiscal Year
              1997 to the first  quarter of Fiscal Year 1998.  As with the gross
              income,  if  anticipated  increased  sales  levels do  occur,  the
              Company would expect the indirect  expense factor to moderate back
              toward  historical  levels,  though there can be no  assurances in
              that regard.

              Operating  income as a  percentage  of  revenues  is 18.8% for the
              first  quarter  of Fiscal  Year  1998,  compared  to 27.2% for the
              comparable  period of the prior  fiscal  year.  This  decrease  is
              primarily  due  to  the   increased   costs  related  to  business
              expansion, as discussed above.

              As  part  of its  product  development  program,  the  Company  is
              continuing  its  software  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  $470,000 and $400,000,  respectively,  during
              the first  quarters of Fiscal  Years 1998 and 1997,  respectively.
              Corresponding   amounts  amortized  were  $250,000  and  $325,000,
              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
              $6.1  million for the first  quarter of Fiscal Year 1998,  up from
              $1.9  million from the  comparable  prior  period.  For the twelve
              month periods ended April 30, 1997 and 1996,  orders received were
              $38.9  million and $14.9  million,  respectively.  Included in the
              amount for the twelve  months  ended April 30, 1997 is $10 million
              of long-term  maintenance  service  business  associated  with the
              purchase  of the GTE  callbox  product  line.  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, 1997  totalled  $17.8  million,  of which $8.6
              million relates to long-term maintenance contracts.  An additional
              $2.0 million of deferred revenue has been recorded for anticipated
              customer warranty obligations.

              The   Company   has    experienced    fluctuations   in   wireless
              communications  products  activity in each of the past four years,
              with  greater  sales in the  second  half of its  fiscal  year and
              lesser  amounts  in the  first  half.  This  trend  may or may not
              continue as the Company attempts to broaden its product offerings.
              The nature of the  wireless  communications  products  business is
              inherently  unpredictable  as the Company will normally not have a
              significant  amount  of  unfilled  orders  at the end of a period.
              Therefore,  the amount of orders,  sales  levels,  and profits are
              difficult to predict and may fluctuate  significantly from quarter
              to quarter.

              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;  and
              changes in laws governing the imposition of duties, quotas, taxes,
              or other charges relating to the import or export of its 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 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,  trademarks, 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.


              Outsourced Staffing Services and Other Revenue

              Revenues  provided by the Company's  outsourced  staffing services
              business  area  increased  14.6%,  from $12.3 million in the first
              quarter of Fiscal Year 1997 to $14.1  million in the first quarter
              of Fiscal Year 1998. Revenues in this business area decreased from
              75.0% of the  Company's  total  revenues  in the first  quarter of
              Fiscal Year 1997 to 70.1% of the Company's  total  revenues in the
              first   quarter   of   Fiscal   Year   1998.   The   increase   in
              period-to-period   revenue  is  due  to  the  acquisition  of  the
              commercial  outsourced  staffing  company on August 1, 1996, which
              contributed $2.6 million of revenue in the first quarter of Fiscal
              Year  1998,  partially  offset by a decrease  in other  outsourced
              staffing  revenue  at some of the  Company's  locations  providing
              services to the U.S. Government.

              Sales  to the  U.S.  Government  as  well as to  government  prime
              contractors were 43% and 34% of the Company's total revenue during
              the first quarters of Fiscal Years 1997 and 1998, respectively. In
              the course of the Company's business, its government contracts are
              periodically   opened  for  competition,   although  none  of  the
              Company's government contracts are scheduled to end in Fiscal Year
              1998.  The  Company  plans to  aggressively  compete  for all work
              opened for  competition  to the extent  possible  and  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.

              Operating income (revenues less direct costs,  indirect costs, and
              depreciation and amortization) for outsourced staffing services is
              virtually  unchanged  from $523,000 in the first quarter of Fiscal
              Year 1997 to  $524,000  in the first  quarter of Fiscal Year 1998.
              Increased  operating  income  provided by the  acquisition  of the
              commercial  outsourced  staffing  company was offset by  decreased
              operating income from government contracts.


       (b)    Financial Condition

              The  Company  signed  a  loan  agreement  with  a  bank  effective
              September 26, 1994,  which was last amended  effective  August 30,
              1996. The loan agreement  consists of (1) an $8 million  revolving
              credit facility, which expires June 30, 1998, and (2) a $5 million
              guidance  line  of  credit,  which  expires  June  30,  1997.  The
              revolving  credit  facility  and the  guidance  line of credit are
              unsecured   provided  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 $14 million  (includes  highly liquid long-term
              investments  with  maturities of 12 to 36 months) during the first
              quarter  of  Fiscal  Year  1998.  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,   software  product   development   costs,  and  the
              Company's stock re-purchase program.

              During  the first  quarter  of Fiscal  Year  1998,  the  Company's
              average  days'  sales  in  accounts   receivable  have  increased,
              primarily  due  to  increased  sales  of  wireless  communications
              products,  which have a longer collection cycle than the Company's
              outsourced staffing revenues.

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

                                                     April 30, 1997        January 31, 1997
                                                     --------------        ----------------
                      <S>                           <C>                   <C>
                      Current ratio                            2.68                   2.87
                      Working capital               $    18,061,000       $     20,429,000
                      Book value per share                    $5.77                  $5.65
</TABLE>

              The  decrease in the current  ratio and amount of working  capital
              during the first quarter of Fiscal Year 1998 is due to the funding
              of the wireless  communications  products business  expansion,  as
              well as funds used to re-purchase  Company common stock during the
              first quarter of Fiscal Year 1998.

              The Company has a significant  commitment for capital expenditures
              at April 30,  1997 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.  Under the software development
              portion of the Company's product development  program, the Company
              capitalized and amortized in accordance with Financial  Accounting
              Standard No. 86,  Accounting for the Costs of Computer Software to
              be Sold,  Leased,  or Otherwise  Marketed,  $470,000 and $250,000,
              respectively, in the first quarter of Fiscal Year 1998.

              The  Company's   Board  of  Directors   has   authorized  a  stock
              re-purchase  program of up to  1,500,000  shares.  As of April 30,
              1997,  the Company  has  re-purchased  and  retired  approximately
              867,000  shares.  The  average  price paid per share  re-purchased
              under the program was $5.71.

              The Company is subject to legal proceedings and claims which 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.

              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.



<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 13, 1997




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