form10ka.htm
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_______________
FORM
10-K/A
AMENDMENT
NO. 1
_______________
|
T
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
FOR THE FISCAL YEAR ENDED JUNE 30,
2008
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
FOR
THE TRANSITION PERIOD
FROM TO
_______________
COMMISSION
FILE NUMBER 000-30083
QUALSTAR
CORPORATION
|
CALIFORNIA
|
95-3927330
|
|
(State
of Incorporation)
|
(I.R.S.
Employer ID No.)
|
3990-B
HERITAGE OAK COURT, SIMI VALLEY, CA 93063
(805)
583-7744
Securities
registered pursuant to Section 12(b) of the Act:
|
Title of Each Class:
|
Name of Each Exchange on Which
Registered:
|
|
Common
Stock
|
The
NASDAQ Stock Market LLC
|
Securities
registered pursuant to Section 12(g) of the
Act: None
Indicate
by check mark whether the registrant is well-known seasoned issuer, as defined
in Rule 405 of the Securities Act of 1933. Yes ¨ No
T
Indicate
by check mark whether the registrant is not required to file reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934. Yes ¨ No
T
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 T No
¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. T
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “accelerated filer,” “large accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check
one):
|
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated filer
q
|
Smaller reporting
company T
|
Indicate
by check mark whether the registrant is a shell company (as defined in Exchange
Act Rule 12b-2). Yes ¨ No
T
As of
December 31, 2007, (the last business day of the registrant’s most recently
completed second fiscal quarter), the aggregate market value of the common
equity held by non-affiliates of the registrant was approximately
$25,676,000.
The total
shares of common stock without par value outstanding at September 19, 2008 is
12,253,117.
DOCUMENTS
INCORPORATED BY REFERENCE
None
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PART
III
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Item
10.
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3
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Item
11.
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4
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Item
12.
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11
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Item
13.
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12
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Item
14.
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12
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14
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15
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
A list of
our executive officers and biographical information appears in Part I, Item 1 of
this report under the caption “Executive Officers of the
Registrant.” The current members of our Board of Directors and
biographical information is set forth below:
|
Name
|
|
Age
|
|
Position
|
|
|
William
J. Gervais
|
|
65
|
|
Chief
Executive Officer, President and Director
|
|
|
Richard
A. Nelson
|
|
65
|
|
Vice
President — Engineering, Secretary and Director
|
|
|
Stanley
W. Corker
|
|
57
|
|
Director
|
|
|
Carl
W. Gromada
|
|
67
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|
Director
|
|
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Robert
A. Meyer
|
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63
|
|
Director
|
|
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Robert
E. Rich
|
|
58
|
|
Director
|
|
William
J. Gervais is a founder of Qualstar and has been our President and a director
since our inception in 1984, and was elected Chief Executive Officer in January
2000. From 1984 until January 2000, Mr. Gervais also served as our Chief
Financial Officer. From 1981 until 1984, Mr. Gervais was President of
Northridge Design Associates, Inc., an engineering consulting firm.
Mr. Gervais was a co-founder, and served as Engineering Manager from 1976
until 1981, of Micropolis Corporation. Mr. Gervais earned a B.S. degree in
Mechanical Engineering from California State Polytechnic University, Pomona in
1967.
Richard
A. Nelson is a founder of Qualstar and has been our Vice President of
Engineering, Secretary and a director since our inception in 1984. From 1974 to
1984, Mr. Nelson was self-employed as an engineering consultant
specializing in microprocessor technology. Mr. Nelson earned a B.S. in
Electronic Engineering from California State Polytechnic University, Pomona in
1966.
Stanley
W. Corker has served as a director of Qualstar since January 26,
2006. Since 1996, Mr. Corker has been the Director of Technology
Research and a partner of Emerald Asset Management, a diversified investment
management firm. Prior to joining Emerald Asset Management, Mr.
Corker obtained over 20 years experience in the computer storage industry from
key roles in engineering and marketing at several manufacturers of tape drives,
and as an industry analyst with International Data Corporation
(IDC). Mr. Corker received a B.S. degree in Computer Science from the
University of Essex, England in 1972, where he later conducted five years of
postgraduate research in computer networking systems.
Carl W.
Gromada has served as a director of Qualstar since March 2005. From
2000 to the present, Mr. Gromada has been a consultant and a private investor.
From 1996 to 2000, Mr. Gromada served as Chief Executive Officer, and a member
of the board of directors of Computer Resources Unlimited, Inc., a company
involved in the design, manufacture and sale of a broad line of products for the
computer storage industry. Mr. Gromada received a B.S. degree in
Business Administration from Temple University in 1965.
Robert A.
Meyer has served as a director of Qualstar since March 16, 2006. Mr.
Meyer is currently retired. From 1994 until June 2005, Mr. Meyer was
employed in various management positions by United States Filter Corporation, a
company engaged in the water treatment industry serving industrial, commercial
and residential customers. His positions at United States Filter
Corporation included Director of Finance, Business Development from 2000 to
2002, and Vice President of Internal Audit from 2003 until he retired in June
2005. Mr. Meyer received a B.S. degree in Accounting from C.W. Post
College in 1972, and he is a Certified Public Accountant.
Robert E.
Rich has served as a director of Qualstar since January 2000. Mr.
Rich has been engaged in the private practice of law since 1975 and has been a
shareholder of Stradling Yocca Carlson & Rauth, legal counsel to Qualstar,
since 1984. Mr. Rich received a B.A. degree in Economics from the
University of California, Los Angeles in 1972 and his J.D. degree from the
University of California, Los Angeles in 1975.
Directors
are elected annually and hold office until the next annual meeting of
shareholders and until their successors have been elected and
qualified.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires Qualstar’s directors and
executive officers, and persons who own more than ten percent of Qualstar’s
common stock, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of our common
stock. Officers, directors and greater than ten percent shareholders
are required by SEC regulations to furnish Qualstar with copies of all Section
16(a) forms they file.
To our
knowledge, based solely on a review of the copies of Section 16(a) reports
furnished to us and written representations that no other reports were required
during the fiscal year ended June 30, 2008, our officers, directors and greater
than ten percent beneficial owners complied with all Section 16(a) filing
requirements.
Code
of Ethics
Qualstar
has adopted a written Code of Business Conduct and Ethics, which complies with
the requirements for a code of ethics pursuant to Item 406(b) of Regulation S-K
under the Securities Exchange Act of 1934, that applies to our chief executive
officer, chief financial officer, controller and persons performing similar
functions. A copy of the Code of Business Conduct and Ethics has been filed as
an exhibit to this report. A copy of the Code of Business Conduct and Ethics is
also posted on our website at www.qualstar.com. A copy of the Code of Business
Conduct and Ethics will be provided, without charge, to any shareholder who
sends a written request to the Chief Financial Officer of Qualstar at 3990-B
Heritage Oak Court, Simi Valley, California 93063.
Audit
Committee
Our Board
of Directors has a standing Audit Committee, which is comprised solely of
non-employee directors who satisfy current Nasdaq standards with respect to
independence, financial expertise and experience. The current members
of the Audit Committee are Stanley W. Corker, Carl W. Gromada and Robert A.
Meyer, with Mr. Gromada serving as Chairman. Our Board of Directors
has determined that both Mr. Gromada and Mr. Meyer meet the Securities and
Exchange Commission’s definition of “audit committee financial
expert.”
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
This
section contains a discussion of the material elements of compensation awarded
to, earned by, or paid to our principal executive officer, our principal
financial officer, and our other three most highly compensated executive
officers who were serving as executive officers of Qualstar at June 30,
2008. These individuals are identified in the Summary Compensation
Table and other compensation tables that follow this section, and are referred
to throughout this report as our “named executive officers.”
Executive
Compensation Program Objectives
Our
executive compensation program is intended to fulfill three primary
objectives: first, to attract and retain qualified executives
required for the success of our business; second, to reward these executives for
financial and operating performance; and third, to align their interests with
those of our stockholders to create long-term stockholder value. The
principal elements of the compensation program for our named executives include
base salary, cash bonus, and long-term incentives in the form of stock
options.
Executive
Officer Compensation Elements
Base
Salaries
Our Board
of Directors, upon the recommendation of the Compensation Committee, establishes
base salaries for our executive officers. The Compensation Committee
considers compensation paid by companies comparable in size to Qualstar, the
experience level and past performance of the individual executives, as well as
the revenues and profitability of Qualstar. Our goal is to provide
base salaries that are fair and competitive, but not excessive.
The table below shows the base salary
established for each of our named executive officers for fiscal years 2008 and
2009, and the percentage increase compared to the prior fiscal
year. Salary adjustments generally take effect in October of each
year, so the amounts shown below may not be exactly the same as those shown in
the Fiscal 2008 Summary Compensation Table.
Name
and Principal Position
|
|
|
|
|
Percent
Increase versus Fiscal 2007 Base Salary
|
|
|
|
|
|
Percent
Increase/(decrease) versus Fiscal 2008
Base
Salary
|
|
|
William
J. Gervais
|
|
$ |
195,000 |
|
|
─
|
|
|
$ |
175,000 |
(1)
|
|
|
(10.3 |
%) |
|
Chief
Executive Officer and President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
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|
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|
|
|
|
|
|
Andrew
A. Farina
|
|
$ |
170,000 |
|
|
|
3.0 |
% |
|
$ |
170,000 |
|
|
─
|
|
|
Vice
President and Chief Financial
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| |
|
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|
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|
|
|
|
|
|
|
|
|
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|
Richard
A. Nelson
|
|
$ |
170,000 |
|
|
─
|
|
|
$ |
170,000 |
|
|
─
|
|
|
Vice
President of Engineering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
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|
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|
Robert
K. Covey
|
|
$ |
172,000 |
|
|
─
|
|
|
$ |
172,000 |
|
|
─
|
|
|
Vice
President of Marketing
|
|
|
|
|
|
|
|
|
|
|
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| |
|
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|
|
|
|
|
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|
|
|
|
|
|
Robert
C. King
|
|
$ |
171,000 |
(2)
|
|
─
|
|
|
$ |
171,000 |
(2)
|
|
─
|
|
|
Vice
President of Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________
|
|
(1)
|
Mr.
Gervais voluntarily reduced his base salary to a rate of $175,000
effective August 25, 2008
|
|
|
(2)
|
The
amounts shown for Mr. King include an allowance of $6,000 per year for
automobile expenses.
|
Cash
Bonuses
Historically,
each year the Board of Directors, upon the recommendation of the Compensation
Committee, has established a cash bonus plan for executive officers based on
Qualstar achieving stated levels of consolidated revenue and pre-tax profits for
the fiscal year, excluding the effects of acquisitions, if any, made during the
fiscal year. However, in recent years Qualstar has not achieved the
levels of revenues or pre-tax profits required to earn even the minimum bonus
amounts under prior bonus plans. Consequently, the Board of Directors
did not establish a bonus plan for executive officers for fiscal 2008, and has
not established a bonus plan for executive officers for fiscal 2009, with the
exception of a cash incentive plan for our Vice President of Sales, as described
below.
Because
of the importance of our XLS tape library products to the future growth of
revenues, the Board of Directors, upon the recommendation of the Compensation
Committee, established a cash incentive plan for our Vice President of Sales in
fiscal 2008 tied directly to unit sales of XLS tape libraries. Under
this plan, our Vice President of Sales earned $1,000 for each XLS tape library
sold in fiscal 2008, for a total of $27,000.
The
Company’s Board of Directors reserves the right to modify the bonus plan from
time to time, and to pay discretionary cash bonuses, if deemed
appropriate.
Equity-Based
Compensation
We use
stock option grants as a form of long-term compensation. For the past
several years, however, our stock generally has not been actively traded and the
price per share has declined or stayed within a relatively narrow
range. Consequently, stock options have not provided significant
compensation in recent years. We did not grant any stock options to our
executive officers in fiscal 2008.
Under our
1998 Stock Incentive Plan, the exercise price of stock options must be no less
than the closing price of our common stock on the date of grant. It
is our policy to grant stock options only at duly held meetings of our Board of
Directors, with an exercise price equal to the closing price of our common stock
on the date of the Board meeting.
Compensation
of our Named Executive Officers
The
amount of each component of compensation established for the named executive
officers is based on a number of factors. These factors include
company performance, individual performance, compensation paid by companies
comparable in size to Qualstar, the recommendations of our Chief Executive
Officer, William J. Gervais, and a review of the prior compensation history of
each executive officer. Some of these factors are discussed
above. Other factors applicable to each named executive officer are
discussed below.
Mr.
Gervais and Mr. Nelson co-founded Qualstar in 1984 and they continue to serve
Qualstar full time as executive officers. The Compensation Committee
considers both Mr. Gervais and Mr. Nelson to be largely responsible for the
success the Company has achieved, and to be two of our most important
employees. However, Mr. Gervais and Mr. Nelson have requested that
their base salaries be maintained at levels the Compensation Committee considers
to be relatively low. The reasons for this include their belief that
in the long term their individual equity ownership of Qualstar potentially will
provide greater financial returns than current
compensation. Moreover, Mr. Gervais voluntarily reduced his salary
from a rate of $195,000 per year to a rate of $175,000 per year effective August
25, 2008 in order to reduce costs. Mr. Gervais and Mr. Nelson
also have never
requested nor accepted stock option awards.
Mr.
Farina has been an employee of Qualstar since November 27, 2006 and our Chief
Financial Officer since December 14, 2006. His starting base salary
was $165,000 per year. On August 30, 2007, the Board approved an
increase in his base salary to $170,000 to bring his compensation more in line
with amounts paid to chief financial officers at public companies of a size
similar to Qualstar.
In an
effort to stimulate sales of our XLS tape libraries, Mr.King receives a cash
bonus based on the number of XLS libraries sold, as described above under the
caption “Cash Bonuses.”
No executive officer
received a raise for fiscal 2008 or fiscal 2009 due to the below-plan financial
performance of Qualstar during fiscal 2007 and fiscal 2008.
Tax
Considerations
Under
Section 162(m) of the Internal Revenue Code, we generally receive a federal
income tax deduction for compensation paid to any of our named executive
officers only to the extent total compensation does not exceed $1.0 million
during any fiscal year or if it is “performance-based” under Section
162(m). The total compensation earned by our executive officers has
always been less than $1.0 million and, consequently, the limitations imposed by
Section 162(m) have not been a factor.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed the foregoing Compensation Discussion and
Analysis and has discussed its contents with Qualstar’s management and the Board
of Directors. Based on the review and discussions, the Compensation Committee
has recommended to the Board that the Compensation Discussion and Analysis be
included in this report.
|
Submitted
by the members of the Compensation Committee
|
|
Stanley
W. Corker (Chairman)
|
|
Carl
W. Gromada
|
|
Robert
A. Meyer
|
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our Board
of Directors has a standing Compensation Committee. The members of
this committee during the fiscal year ended June 30, 2008 and presently are
Stanley W. Corker, Carl W. Gromada and Robert A. Meyer. No executive
officer of Qualstar serves as a member of the board of directors or compensation
committee of any entity that has one or more executive officers serving on our
Board of Directors. No member of the Compensation Committee is, or
ever has been, an employee or officer of Qualstar.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following tables show the compensation earned during the fiscal years ended June
30, 2008 and June 30, 2007 by our principal executive officer, our principal
financial officer, and our three other most highly compensated executive
officers who were serving as executive officers at June 30,
2008. These officers are referred to in this report as the “named
executive officers.”
Fiscal
2008 and 2007 Summary Compensation Table
Name
and Principal Position
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other Compensation (3)
($)
|
|
|
|
|
|
William
J. Gervais
|
|
|
2008
|
|
$ |
195,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3,867 |
|
|
$ |
198,867 |
|
|
Chief
Executive Officer and President
|
|
|
2007
|
|
|
193,000 |
|
|
|
— |
|
|
|
— |
|
|
|
3,868 |
|
|
|
196,868 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew
A. Farina (4)
|
|
|
2008
|
|
|
169,055 |
|
|
|
— |
|
|
|
15,636 |
|
|
|
573 |
|
|
|
185,264 |
|
|
Vice
President and Chief Financial Officer
|
|
|
2007
|
|
|
92,000 |
|
|
|
— |
|
|
|
6,017 |
|
|
|
286 |
|
|
|
98,303 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
A. Nelson
|
|
|
2008
|
|
|
169,998 |
|
|
|
— |
|
|
|
— |
|
|
|
6,274 |
|
|
|
176,272 |
|
|
Vice
President of Engineering
|
|
|
2007
|
|
|
164,000 |
|
|
|
— |
|
|
|
— |
|
|
|
6,545 |
|
|
|
170,545 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
K. Covey
|
|
|
2008
|
|
|
175,303 |
|
|
|
— |
|
|
|
— |
|
|
|
4,445 |
|
|
|
179,748 |
|
|
Vice
President of Marketing
|
|
|
2007
|
|
|
171,000 |
|
|
|
— |
|
|
|
— |
|
|
|
3,962 |
|
|
|
174,962 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
C. King
|
|
|
2008
|
|
|
170,976 |
|
|
|
27,000 |
|
|
|
31,515 |
|
|
|
5,724 |
|
|
|
235,215 |
|
|
Vice
President of Sales
|
|
|
2007
|
|
|
169,000 |
|
|
|
14,000 |
|
|
|
21,894 |
|
|
|
5,724 |
|
|
|
210,618 |
|
_____________
|
(1)
|
The
amounts shown in these columns reflect salary and bonuses earned by the
named executive officers during fiscal years 2008 and 2007 and include
amounts which the executives elected to defer, on a discretionary basis,
pursuant to Qualstar’s 401(k) savings
plan.
|
|
(2)
|
The
amounts shown in this column represent the compensation expense recognized
by Qualstar in fiscal years 2008 and 2007 for financial statement
reporting purposes with respect to the fair value of stock options granted
during fiscal 2008 and in prior fiscal years. The compensation
expense is computed in accordance with SFAS 123R, and does not necessarily
correspond to the actual value that will be realized by the named
executive officers. Stock options granted to the named
executive officers vest over four years at the rate of 25% of the shares
as of each anniversary of the date of grant. Pursuant to
SEC rules, the dollar amounts shown in the table exclude the impact of
estimated forfeitures related to service-based vesting
conditions. Under SFAS 123R, the fair value of stock options is
calculated using the closing price of Qualstar common stock on the date of
grant. For additional information regarding the calculation of the fair
value of stock options, refer to note 7 of the Qualstar financial
statements included in Item 8 of this
report.
|
|
(3)
|
The
amounts shown above under “All Other Compensation” represent matching
contributions under our 401(k) plan, and premiums for disability and life
insurance.
|
|
(4)
|
Mr.
Farina’s employment commenced as of November 27,
2006
|
Grants
of Plan-Based Awards
The
following table sets forth information regarding grants of awards to each named
executive officer during the year ended June 30, 2008 under our equity incentive
plan.
Grants
of Plan-Based Awards in Fiscal Year 2008
|
|
|
|
|
|
All Other
Option Awards: Number of Securities Underlying Options (1)
(#)
|
|
|
Exercise or
Base Price of Option Awards ($ / Sh)
|
|
|
Grant
Date Fair Value of Stock and Option Awards (2)
($)
|
|
|
William
J. Gervais
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Andrew
A. Farina
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Richard
A. Nelson
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Robert
K. Covey
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Robert
C. King
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
________
|
(1)
|
The
amounts shown in this column represent the number of shares of common
stock underlying stock options granted in fiscal year 2008 to each named
executive officer. Stock options granted to the named executive
officers vest over four years at the rate of 25% of the number of shares
as of each anniversary of the date of grant, provided that the executive
is still employed by Qualstar on the vesting
date.
|
|
(2)
|
The
amounts shown in this column represent the full grant date fair value of
stock options granted in fiscal year 2008, computed in accordance with
SFAS 123R, and does not necessarily correspond to the actual value that
will be realized by the named executive officers. Under SFAS
123R, the grant date fair value of stock options is calculated using the
closing price of Qualstar common stock on the date of
grant. This amount is then recognized by the Company as
compensation expense for financial statement reporting purposes ratably
over the vesting period. The amount recognized as compensation
expense in fiscal 2008 is included in the Summary Compensation Table above
in the column headed “Option Awards.” For additional
information regarding the calculation of the grant date fair value of
stock options, refer to note 7 of the Qualstar financial statements
included in Item 8 of this
report.
|
Outstanding
Equity Awards
The
following table provides information regarding outstanding equity awards held by
each named executive officer as of June 30, 2008, including the number of
unexercised vested and unvested stock options. The vesting schedule for each
grant is shown following this table.
Outstanding
Equity Awards at 2008 Fiscal Year End
|
|
|
|
|
|
|
|
Number
of Securities
Underlying
Unexercised
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
J. Gervais
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
—
|
|
|
Andrew
A. Farina
|
|
|
12,500 |
|
|
|
37,500 |
|
|
$ |
2.88 |
|
|
12/14/2016
|
|
|
Richard
A. Nelson
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
—
|
|
|
Robert
K. Covey
|
|
|
20,000 |
|
|
|
— |
|
|
|
5.94 |
|
|
01/03/2012
|
|
|
Robert
C. King
|
|
|
37,500 |
|
|
|
12,500 |
|
|
|
3.71 |
|
|
06/15/2015
|
|
|
|
|
|
12,500 |
|
|
|
37,500 |
|
|
|
2.88 |
|
|
12/14/2016
|
|
|
|
|
(1)
|
|
Stock
options granted to the named executive officers vest over four years at
the rate of 25% of the options as of each anniversary of the date of
grant, provided that the executive is still employed by Qualstar on the
vesting date. The amounts shown in this column represent the
remaining unvested portion of each option
grant.
|
Option
Exercises
The table below sets forth information
for each named executive officer regarding the exercise of stock options during
the fiscal year ended June 30, 2008, including the aggregate value realized upon
exercise before payment of any applicable withholding taxes.
Option
Exercises in Fiscal Year 2008
|
|
|
|
|
|
|
|
Number of Shares
Acquired on Exercise
(#)
|
|
|
Value Realized
on
Exercise (1)
($)
|
|
|
William
J. Gervais
|
|
|
— |
|
|
|
— |
|
|
Andrew
A. Farina
|
|
|
— |
|
|
|
— |
|
|
Richard
A. Nelson
|
|
|
— |
|
|
|
— |
|
|
Robert
K. Covey
|
|
|
— |
|
|
|
— |
|
|
Robert
C. King
|
|
|
— |
|
|
|
— |
|
| |
____________
|
| |
(1)
|
The
value realized on exercise of option awards represents the market price
per share of common stock on the date of exercise, less the stock option
exercise price per share, multiplied by the number of stock options
exercised.
|
Director
Compensation
Each of
our non-employee directors receives cash fees and equity-based awards as
compensation for his service on the Board of Directors and the committees of the
Board on which he is a member. The table below sets forth cash
compensation earned by each non-employee director, and share-based compensation
expense recognized by us for each non-employee director, during the fiscal year
ended June 30, 2008. All compensation earned by Mr. Gervais and Mr.
Nelson is reported in the Summary Compensation Table above and has been excluded
from the table below.
Fiscal
Year 2008 Director Compensation Table
|
|
|
Fees Earned or
Paid in Cash (1)
($)
|
|
|
|
|
|
|
|
|
Stanley
W. Corker
|
|
$ |
20,500 |
|
|
$ |
5,760 |
|
|
$ |
26,260 |
|
|
Carl
W. Gromada
|
|
|
20,250 |
|
|
|
5,760 |
|
|
|
26,010 |
|
|
Robert
A. Meyer
|
|
|
19,250 |
|
|
|
5,760 |
|
|
|
25,010 |
|
|
Robert
E. Rich
|
|
|
13,250 |
|
|
|
5,760 |
|
|
|
19,010 |
|
|
_______________
|
|
(1)
|
|
The
amounts shown in this column represent the amount of cash compensation
earned in fiscal year 2008 for service on the Board of Directors and any
committees of the Board on which the director was a member in fiscal
2008.
|
| |
|
|
|
(2)
|
|
The
amounts shown in this column represent the compensation expense recognized
by Qualstar in fiscal year 2008 for financial statement reporting purposes
with respect to the fair value of stock options granted in prior fiscal
years. No stock options were granted to our directors during
fiscal 2008. The compensation expense is computed in accordance
with SFAS 123R, and does not necessarily correspond to the actual value
that will be realized by the directors. Stock options granted
to our directors vest over four years at the rate of 25% of the shares as
of each anniversary of the date of grant. Pursuant to SEC
rules, the dollar amounts shown in the table exclude the impact of
estimated forfeitures related to service-based vesting
conditions. Under SFAS 123R, the fair value of stock options is
calculated using the closing price of Qualstar common stock on the date of
grant. For additional information regarding the calculation of the fair
value of stock options, refer to note 7 of the Qualstar financial
statements included in Item 8 of this report.
|
| |
|
|
|
(3)
|
|
As
of June 30, 2008, each of our non-employee directors named in the above
table held unexercised stock options for 24,000 shares of our common
stock.
|
Each of
our non-employee directors receives $2,000 per quarter plus $1,000 for each
Board meeting attended as compensation for his service on the Board, and is
reimbursed for expenses incurred in connection with attendance at meetings of
the Board and any committees on which he serves. Directors who serve on the
Audit Committee of our Board receive an additional fee of $1,000 per quarter
plus an attendance fee of $500 per meeting if the Audit Committee meeting is
held in conjunction with a meeting of the full Board, and $1,000 per meeting if
held on a day when the full Board does not meet. Directors who serve on the
Compensation Committee of our Board receive an additional fee of $500 for
attending meetings of that committee that are held on a day when the full Board
does not meet. An attendance fee of $250 per meeting is paid for telephonic
meetings of the full Board or of a committee on which a director is a member. No
fees are paid for service on the Board to directors who are employees of
Qualstar.
Directors
are eligible to receive stock options under our 1998 Stock Incentive
Plan. However, no stock options were granted to our non-employee
directors during the fiscal year ended June 30, 2008.
Potential
Benefits Upon or Following a Change in Control
Stock
options granted under our 1998 Stock Incentive Plan provide that upon certain
circumstances in the event of or following a change in control of Qualstar, the
unvested portion of such stock options will accelerate and become immediately
vested in full. In general, a change in control is deemed to occur if
we were to sell substantially all of our assets or if Qualstar were to merge
into, consolidate with or enter into a reorganization with another entity in a
transaction in which Qualstar is not the surviving corporation.
If a
change in control occurs and the acquiring entity does not assume and continue
the employee’s rights under the unvested stock options, then all unvested stock
options will accelerate and vest in full upon the occurrence of the change in
control. If the acquiring entity does assume the employee’s rights
under the unvested stock options, but the employee’s employment subsequently is
terminated without cause, or if the employee resigns for good reason after the
change in control, then all unvested stock options held by the employee would
accelerate and vest in full as of the date of termination.
The
reasons for which an employee may voluntarily resign and trigger acceleration of
vesting include a change in the employee’s position which materially reduces his
or her duties and responsibilities or the level of management to which the
employee reports, a reduction in the employee’s level of compensation and
benefits by more than 15 percent, or a relocation of employee’s principal place
of employment by more than 30 miles without his or her consent.
The table
below sets forth information regarding the estimated amounts that each named
executive officer would have realized in the event that a change in control of
Qualstar had occurred and all of his unvested stock options had accelerated and
become immediately vested in full as of June 30, 2008.
Estimated
Benefits at 2008 Fiscal Year End in the Event of a Change in
Control
|
|
|
|
|
|
William
J. Gervais
|
|
|
— |
|
|
Andrew
A. Farina
|
|
$ |
6,000 |
|
|
Richard A.
Nelson
|
|
|
— |
|
|
Robert
K. Covey
|
|
|
— |
|
|
Robert
C. King
|
|
$ |
6,000 |
|
|
|
(1)
|
The
amounts in this column represent the aggregate gain each named executive
officer would have realized if all unvested stock options granted under
the 1998 Stock Incentive Plan that were held by him on June 30, 2008
accelerated and became immediately vested in full on that
date. The amount of gain was calculated based on the difference
between the exercise price of each unvested option and the closing price
of our common stock on that date, which was $3.04 per
share.
|
|
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
The
following table sets forth information with respect to the beneficial ownership
of our common stock as of October 20, 2008 for:
|
|
·
|
each
person (or group of affiliated persons) who we know beneficially owns more
than 5% of our common stock;
|
|
|
·
|
each
of the named executive officers;
and
|
|
|
·
|
all
of our directors and executive officers as a
group.
|
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and includes voting and investment power with respect to
shares. Except as indicated by footnote, the persons named in the
table have sole voting and sole investment control with respect to all shares
beneficially owned, subject to community property laws where
applicable. The percentage of shares beneficially owned is based on
12,253,117 shares of common stock outstanding as of October 20,
2008. Shares of common stock subject to options currently exercisable
or exercisable within 60 days of October 20, 2008, are deemed outstanding for
computing the percentage of the person holding such options, but are not deemed
outstanding for computing the percentage of any other person. The
address for those individuals for which an address is not otherwise indicated
is: c/o Qualstar Corporation, 3990-B Heritage Oak Court, Simi Valley, California
93063.
|
|
|
Common
|
|
|
Options
Exercisable Within 60
|
|
|
Beneficial Ownership
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Percent
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
J. Gervais
|
|
|
2,989,450 |
|
|
|
— |
|
|
|
2,989,450 |
|
|
|
24.4 |
% |
|
Richard
A. Nelson
|
|
|
1,890,560 |
|
|
|
— |
|
|
|
1,890,560 |
|
|
|
15.4 |
% |
|
Wells
Capital Management Inc.(2)
|
|
|
834,088 |
|
|
|
— |
|
|
|
834,088 |
|
|
|
6.8 |
% |
|
525
Market Street, 10th
Floor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San
Francisco, CA 94105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanley
W. Corker
|
|
|
8,940 |
|
|
|
12,000 |
|
|
|
20,940 |
|
|
|
* |
|
|
Carl
Gromada
|
|
|
48,271 |
|
|
|
12,000 |
|
|
|
60,271 |
|
|
|
* |
|
|
Robert
A. Meyer
|
|
|
— |
|
|
|
12,000 |
|
|
|
12,000 |
|
|
|
* |
|
|
Robert
E. Rich
|
|
|
131,400 |
|
|
|
12,000 |
|
|
|
143,400 |
|
|
|
1.2 |
% |
|
Robert
K. Covey
|
|
|
48,280 |
|
|
|
20,000 |
|
|
|
68,280 |
|
|
|
* |
|
|
Andrew
A. Farina
|
|
|
— |
|
|
|
25,000 |
|
|
|
25,000 |
|
|
|
* |
|
|
David
L. Griffith
|
|
|
— |
|
|
|
80,000 |
|
|
|
80,000 |
|
|
|
* |
|
|
Robert
C. King
|
|
|
— |
|
|
|
62,500 |
|
|
|
62,500 |
|
|
|
* |
|
|
All
directors and officers as a group (10 persons)
|
|
|
5,116,901 |
|
|
|
235,500 |
|
|
|
5,352,401 |
|
|
|
42.9 |
% |
_____________
*Less
than 1.0%
|
|
(1)
|
Represents
shares that may be acquired upon exercise of stock options which are
either currently vested or will vest within 60 days of October 20,
2008.
|
|
|
(2)
|
Based
on information contained in reports filed with the Securities and Exchange
Commission, Wells Fargo & Company, as the parent holding company
of Wells Capital Management Incorporated, an investment adviser,
beneficially owns 834,088 shares as of August 31,
2008.
|
Additional
Equity Compensation Plan Information
Information
regarding Qualstar’s equity compensation plans as of June 30, 2008 is included
in Item 5 of this report and is incorporated herein by reference.
|
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
Transactions
with Related Persons
There are
no relationships or transactions involving any of our directors or executive
officers for which disclosure is required under the rules of the Securities and
Exchange Commission.
In
accordance with the charter of the Audit Committee of our Board of Directors,
the Audit Committee is responsible for reviewing any proposed transaction with
any related person which involves a potential conflict of interest or for which
approval is required under applicable Securities and Exchange Commission and
Nasdaq rules. Currently, this review and approval requirement applies
to any transaction to which Qualstar will be a party, in which the amount
involved exceeds $120,000, and in which any of the following persons will have a
direct or indirect material interest: (a) any of our directors or executive
officers, (b) any nominee for election as a director, (c) any security holder
who is known to us to own of record or beneficially more than five percent of
our common stock, or (d) any member of the immediate family of any of the
persons described in the foregoing clauses (a) through (c).
In the
event that management becomes aware of any related person transaction,
management will present information regarding the proposed transaction to the
Audit Committee for review. Approval of a transaction with a related
person requires the affirmative vote of a majority of the members of the Audit
Committee or of a majority of the members of the full Board of
Directors. If the related person transaction involves a member or
members of the Board, approval requires a majority vote of the directors who do
not have a financial interest in the transaction.
Director
Independence
Our Board
has determined that all of our directors satisfy the current “independent
director” standards established by rules of The Nasdaq Stock Market, Inc.
(“Nasdaq”), except for William J. Gervais, who is Chief Executive Officer and
President of Qualstar, and Richard A. Nelson, who is Vice President Engineering
and Secretary of Qualstar. Each director serving on the Audit
Committee of our Board also meets the more stringent independence requirements
established by Securities and Exchange Commission rules applicable to audit
committees. Mr. Robert E. Rich, a member of our Board of Directors
since January 2000, is a shareholder in the law firm of Stradling Yocca Carlson
& Rauth, which has provided legal services to Qualstar since
1984. Our Board has determined that no director has a relationship
that would interfere with the exercise of independent judgment in carrying out
his responsibilities as a director. There are no family relationships
among any of the directors or executive officers of the Company.
|
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
Fees
Paid to Independent Registered Public Accountants
The
aggregate fees billed by Ernst & Young LLP, independent registered public
accountants, for professional services rendered to Qualstar during the fiscal
years ended June 30, 2007 and fiscal 2008 were comprised of the
following:
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Audit
Fees
|
|
$ |
189,400 |
|
|
$ |
257,040 |
|
|
Audit-related
fees
|
|
|
2,784 |
|
|
|
7,350 |
|
|
Tax
fees
|
|
|
87,637 |
|
|
|
83,938 |
|
|
All
other fees
|
|
|
— |
|
|
|
— |
|
|
Total
fees
|
|
$ |
279,821 |
|
|
$ |
348,328 |
|
Audit
fees include fees for professional services rendered in connection with the
audit of our consolidated financial statements for each year and reviews of our
unaudited consolidated quarterly financial statements, as well as fees related
to consents and reports in connection with regulatory filings for those fiscal
years.
Audit-related
fees in fiscal 2007 and 2008 were primarily for general assistance in connection
with the implementation of procedures required to comply with rules and
regulations promulgated pursuant to the Sarbanes-Oxley Act of 2002.
Tax fees
related primarily to tax compliance and advisory services, and the preparation
of federal and state tax returns for each year. Tax fees for fiscal
2007 and 2008 also include professional services related to government audits of
our federal and state tax returns.
Audit
Committee Pre-Approval Policies and Procedures
Our Audit
Committee’s policy is to pre-approve all audit and permissible non-audit
services provided by our independent registered public accountants in accordance
with applicable Securities and Exchange Commission rules. The Audit Committee
adopted a written pre-approval policy on June 25, 2003, and all services
performed by Ernst & Young in connection with engagements subsequent to June
25, 2003 have been pre-approved in accordance with the Audit Committee’s
pre-approval policy. The Audit Committee generally pre-approves particular
services or categories of services on a case-by-case basis. The independent
registered public accountants and management periodically report to the Audit
Committee regarding the extent of services provided by the independent
registered public accountants in accordance with these pre-approvals, and the
fees for the services performed to date.
Pursuant
to the requirements of Section 13 or 15(d) 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.
|
|
QUALSTAR
CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
October 28, 2008
|
By:
|
/s/ WILLIAM J.
GERVAIS
|
|
|
|
|
William
J. Gervais,
|
|
|
|
|
Chief
Executive Officer and President
|
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
|
Signature
|
Title
|
Date
|
|
|
|
|
|
|
|
|
|
|
Chief
Executive Officer,
|
October
28, 2008
|
|
William
J. Gervais
|
President
and Director
|
|
|
|
(principal
executive officer)
|
|
|
|
|
|
|
|
|
|
|
|
Vice
President, Engineering
|
October
28, 2008
|
|
Richard
A. Nelson
|
Secretary
and Director
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
October
28, 2008
|
|
Carl
W. Gromada
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
October
28, 2008
|
|
Stanley
W. Corker
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
October
28, 2008
|
|
Robert
E. Rich
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
October
28, 2008
|
|
Robert
A. Meyer
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice-President
and CFO
|
October
28, 2008
|
|
Andrew
A. Farina
|
(principal
financial officer)
|
|
|
|
|
|
|
3.1(1)
|
|
Restated
Articles of Incorporation.
|
|
3.2(4)
|
|
Bylaws,
as amended and restated January 14, 2000.
|
|
3.3(4)
|
|
Amendment
to Bylaws, adopted December 21, 2007.
|
|
10.1(1)*
|
|
1998
Stock Incentive Plan, as amended and restated.
|
|
10.2(1)
|
|
Form
of Indemnification Agreement.
|
|
10.3(2)
|
|
Lease
agreement between Strategic Performance Fund-II, Inc. and Qualstar
Corporation, dated September 20, 2000.
|
|
14.1(3)
|
|
Code
of Business Conduct and Ethics
|
|
21.1
|
|
Subsidiaries
of Qualstar Corporation
|
|
23.1
|
|
Consent
of Independent Registered Public Accounting Firm.
|
|
|
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
Certification
of Principal Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
Certification
of Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
__________
|
(1)
|
Incorporated
by reference to the designated exhibits to Qualstar’s registration
statement on Form S-1 (Commission File No. 333-96009), declared effective
by the Commission on June 22, 2000.
|
|
(2)
|
Incorporated
by reference to the designated exhibit to Qualstar’s Report on Form 10-Q
for the fiscal quarter ended September 30,
2000.
|
|
(3)
|
Incorporated
by reference to the designated exhibit to Qualstar’s Report on Form 10-K
for the fiscal year ended June 30,
2004.
|
|
(4)
|
Incorporated
by reference to the designated exhibit to Qualstar’s Report on Form 10-Q
for the fiscal quarter ended December 31,
2007.
|
|
*
|
Each
of these exhibits constitutes a management contract, compensatory plan or
arrangement required to be filed as an exhibit to this report pursuant to
Item 15(b) of this report.
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15