SOURCE: Qualstar

Qualstar

September 30, 2013 13:15 ET

Qualstar Reports Fiscal 2013 Fourth Quarter and Full Year Results

SIMI VALLEY, CA--(Marketwired - Sep 30, 2013) - Qualstar® Corporation (NASDAQ: QBAK), a manufacturer of data storage solutions and high-efficiency power supplies, today reported financial results for the fourth quarter and the fiscal year ended June 30, 2013.

Fiscal 2013 Fourth Quarter Financial Results
Revenues for the fourth quarter of fiscal 2013 were $2.9 million, compared with $4.3 million for the fourth quarter of fiscal 2012, a decrease of $1.4 million or 33%. Revenue was negatively impacted by previous management's execution and strategy, as well as the market for tape storage devices. Loss from operations was $3.5 million for the fourth quarter of fiscal 2013 compared with $2.5 million for the fourth quarter of fiscal 2012, primarily due to legal fees and inventory write downs. Loss per share was $(0.28) for the fourth quarter of fiscal 2013compared with loss per share of $(0.22) per basic and diluted share for the fourth quarter of fiscal 2012.

Tape library segment revenues were $1.1 million for the fourth quarter of 2013, compared with $1.7 million for the same period last year, a decrease of $0.6 million or 35%. Power supply segment revenues were $1.7 million for the quarter, compared with $2.5 million in the fourth quarter of 2012, a decrease of $0.8 million, or 32%.

Gross margin was 12% of revenues or $370,000, for the quarter ended June 30, 2013, an improvement over the negative gross margin of (0.9)% of revenues or $(40,000) for the three months ended June 30, 2012. The increase in gross profit was primarily attributed to lower charges to the inventory reserves. Engineering expenses for the fourth quarter of the fiscal year 2013 were $1.0 million, or 36% of revenues, compared with $663,000, or 15.4% of revenues for the fourth quarter of the fiscal year 2012. Sales and marketing expenses were $854,000 or 30% of revenues for the fourth quarter of fiscal 2013, compared with $548,000, or 12.8% of revenues in the corresponding period last year. General and administrative expenses for the fourth quarter of fiscal 2013 were $1.6 million, or 57% of revenues, compared to $1.3 million, or 29% of revenues, for the same period last year.

Fiscal 2013 Full Year Financial Results
Qualstar reported revenues of $12.6 million in the fiscal year 2013, a decrease of 27% compared with $17.1 million in the fiscal year 2012. Net loss in fiscal 2013 was $10.4 million or $(0.85) per basic and diluted share. This compares with a net loss in the fiscal year 2012 of $4.1 million, or $(0.34) per basic and diluted share.

Cash, cash equivalents and marketable securities were $13.8 million at June 30, 2013, compared with $20.9 million at June 30, 2012, down $7.1 million. Inventory, net of reserves, at June 30, 2013, was $1.6 million, compared with $4.5 million at June 30, 2012. This decrease in inventory was primarily attributable to the outsourced manufacturing contract with CTS.

"Fiscal year 2013 was a year of significant changes, culminating in a new Board and CEO immediately after the year end," said CEO and President, Steven Bronson. "The results for the fiscal year 2013 reflect the prior management's plan to build cost structure ahead of the revenue to support it. The new management is committed to a more prudent and financially sound plan. Since taking office, we have significantly reduced headcount, consolidated all of our activities into one location in Simi Valley, CA, and eliminated many non value-added expenditures. We believe the resulting operating expense savings will enable us to be much more competitive. We are increasing resources in sales, especially in the international arena, from which more than half of our revenues arise. We also plan on expanding our product offerings for both business segments."

About Qualstar Corporation

Qualstar Corporation ("Qualstar" or "the Company") was incorporated in California in 1984. We are a leading provider of data storage systems marketed under the Qualstar brand, and high efficiency and high density power supplies marketed under the N2Power brand. The Company's products are known throughout the world for high quality and Simply Reliable designs that provide years of trouble-free service. 

The data storage division provides high quality and highly reliable data protection and archive storage systems which are used to record, retrieve and manage electronic data, primarily in networked computing environments. Our storage products integrate with all major operating systems including Windows, Linux and UNIX, and are compatible with a wide range of storage management software solutions such as those offered by IBM, EMC, CommVault and Symantec. We offer products spanning the storage needs of the small and medium-size business market to the enterprise market. We provide comprehensive worldwide service and support programs that enable customers to keep our products running in environments where the ability to constantly access data is vital. Data storage products include highly scalable automated magnetic tape libraries providing solutions for organizations requiring backup, recovery and archival storage of critical electronic information in such vertical markets as media and entertainment, hospitals, universities, and government.

The N2Power division provides both high efficiency and high density AC/DC and DC/DC power supplies for a variety of applications including data center technologies such as switches, routers, data storage, servers and networking communications equipment. Power supply products include ultra-small high efficiency open frame switching power supplies and provide power solutions to original equipment manufacturers to incorporate into products for telecommunications and networking, industrial, gaming and test equipment and other applications such as LEDs. We also design and manufacture power solutions for the telecommunications industry employing both conventional AC/DC systems and DC/DC systems. With a wide variety of standard products and the ability to create custom and semi-custom products, we offer a very comprehensive product line to OEMs that require high-value, high-efficiency power supplies to meet individual needs. The N2 brand is one of the industry leaders in delivering high power density/high efficiency ratios.

We design our products at our location in California, where our research, development and engineering takes place, and we sell our products globally through authorized resellers and OEMs. More than half of our revenues are generated internationally. Our N2Power division utilizes contract manufacturers in Asia to produce our power supply products, while our Storage division products are manufactured by a contract manufacturer in California.

More information is available at www.qualstar.com or www.n2power.com or by phone at 805-583-7744.

Forward-Looking Statements
Statements concerning the future business, operating results and financial condition of the Company are "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's current expectations and are subject to a number of uncertainties that could cause actual performance and results to differ materially from the results discussed in the forward-looking statements. Factors that could affect the Company's actual results include the Company's ability to increase sales of its products; rescheduling or cancellation of customer orders; unexpected shortages of critical components; unexpected product design or quality problems; and, adverse changes in market demand for its products. The Company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Further information on these and other potential factors that could affect the Company's financial results or condition are included in Qualstar's filings with the Securities and Exchange Commission. In particular, reference is made to the "Risk Factors" section of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2013, and to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of its Form 10-K.

 
 
QUALSTAR CORPORATION
STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except per share amounts)
 
             
    (Unaudited)        
    Three Months Ended     Twelve Months Ended  
    June 30,     June 30,  
    2013     2012     2013     2012  
                         
Net revenues   $ 2,882     $ 4,294     $ 12,642     $ 17,081  
                                 
Cost of goods sold     2,512       4,334       9,187       13,390  
                                 
Gross profit     (370 )     (40 )     3,455       3,691  
                                 
Operating expenses:                                
  Engineering     1,028       663       3,290       2,657  
  Sales and marketing     854       548       3,035       1,908  
  General and Administrative     1,640       1,264       4,875       3,241  
  Restructuring Expenses     360       -       2,666       -  
    Total operating expenses     3,882       2,475       13,866       7,806  
                                 
Loss from operations     (3,512 )     (2,515 )     (10,411 )     (4,115 )
                                 
Other (expense) income     69       (109 )     48       24  
                                 
Loss before income taxes     (3,443 )     (2,624 )     (10,363 )     (4,091 )
                                 
Provision for income taxes     -       16       -       16  
                                 
Net loss   $ (3,443 )   $ (2,640 )   $ (10,363 )   $ (4,107 )
                                 
Loss per share:                                
  Basic and Diluted   $ (0.28 )   $ (0.22 )   $ (0.85 )   $ (0.34 )
                                 
Shares used to compute loss per share:                                
  Basic and Diluted     12,253       12,253       12,253       12,253  
                                 
                                 
 
 
QUALSTAR CORPORATION
CONDENSED BALANCE SHEETS
(in thousands)
 
           
    June 30,     June 30,
    2013     2012
           
ASSETS          
           
Current assets:          
  Cash and cash equivalents   $ 1,966     $ 7,381
  Marketable securities, short-term     6,305       7,135
  Receivables, net of allowance for doubtful accounts of $68 as of June 30, 2013 and $38 as of June 30, 2012     3,140       2,995
  Receivable from CTS for manufacturing inventories, net of allowance of $203 for returns     644       -
  Inventories, net     1,628
      4,475
  Prepaid expenses and other current assets     363       151
                 
    Total current assets     14,049       22,137
               
Property and equipment, net     545       268
Marketable securities, long-term     5,546       6,369
Other assets     70       50
               
    Total assets   $ 20,207     $ 28,824
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
               
Current liabilities:              
  Accounts payable   $ 2,089     $ 2,039
  Accrued payroll and related liabilities     424       332
  Other accrued liabilities     2,932       1,374
                 
    Total current liabilities     5,445       3,745
               
Other long-term liabilities     17       26
  Commitments and contingencies              
  Shareholders' equity:              
  Common stock, no par value; 50,000 shares authorized, 12,253 shares issued and outstanding as of June 30, 2013 and June 30, 2012     18,938       18,878
  Accumulated other comprehensive income     4       9
  (Accumulated deficit) retained earnings     (4,197 )     6,166
    Total shareholders' equity     14,745       25,053
                   
    Total liabilities and shareholders' equity   $ 20,207     $ 28,824
               
               

Contact Information

  • For more information, contact:

    Philip Varley
    Chief Financial Officer
    Qualstar Corporation
    (805) 583-7744 x 114
    Email Contact