13D Filing: Elkhorn Partners and Comarco Inc (CMRO)

Elkhorn Partners Limited Partnership (the “Partnership”) makes this filing to amend certain information previously reported by the Partnership.  This filing constitutes Amendment No. 9 to the Schedule 13D of the Partnership.  The Partnership amends such prior Schedule 13D reports with respect to the common stock of Comarco, Inc. (“Comarco”) by adding the following information to the items indicated.

ITEM 5.   INTEREST IN SECURITIES OF THE ISSUER.

(a)–(b)  As of September 13, 2017, the Partnership owned 6,795,872 shares of Comarco common stock. The Comarco Form 10-Q for the quarter ended April 30, 2017 reported that there were outstanding 14,614,165 shares of Comarco common stock as of June 14, 2017.  Based on this number, the Partnership owns approximately 46.5% of the Comarco common stock.

(c)  The number of shares and ownership percentage of Comarco common stock described in this Item 5 do not include the shares of Comarco common stock issuable upon conversion of the Comarco preferred stock described in Item 6 below or exercise of the Warrant described in item 6 below, because the Partnership does not have the right to acquire beneficial ownership of such shares within 60 days. Other than the transactions described in Item 6 below, the Partnership has not engaged in any transactions related to the shares of Comarco common stock in the past 60 days.

ITEM 6.   CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.

On September 11, 2017, the Partnership purchased 2,000,000 shares of Series A Contingent Convertible Preferred Stock of Comarco at a price of $0.10 per share pursuant to a Subscription Agreement of even date therewith between Comarco and the Partnership (the “Subscription Agreement”). On the same date, another investor purchased 5,000,000 shares of the Comarco preferred stock on the same terms and conditions.  The terms of the Comarco preferred stock were established pursuant to the Amended and Restated Certificate of Determination of Preferences of Series A Contingent Convertible Preferred Stock of Comarco, Inc. (the “Certificate of Determination”).

The Subscription Agreement also provides that, upon the earlier of (a) the occurrence of certain “Triggering Events” (as defined in the Certificate of Determination) or (b) immediately prior to the liquidation, dissolution or winding up of Comarco, Comarco will, for no additional consideration, issue to the Partnership a warrant to purchase shares of Comarco common stock (the “Warrant”).  If issued, the Warrant will have a term of eight years and permit the Partnership to immediately purchase up to 7,210,600 shares of Comarco common stock at a price of $0.05 per share.

The Comarco preferred stock accrues a cumulative, non-compounding dividend of 5% and is senior to the Comarco common stock in any liquidation, dissolution or winding up and with respect to dividends.  The Comarco preferred stock is automatically convertible into Comarco common stock on a one-for-one basis upon the occurrence of certain “Triggering Events” (as defined in the Certificate of Determination).

The foregoing descriptions of the Subscription Agreement, the Comarco preferred stock and the Warrant are qualified in their entirety by reference to the Subscription Agreement, the Certificate of Determination and the form of the Warrant attached hereto as Exhibit A, Exhibit B and Exhibit C, respectively, and incorporated herein by reference.