10-K/A 1 d10ka.txt FORM 10-K / AMENDMENT #1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-K/A AMENDMENT NO. 1 --------------- [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2001 OR [_] 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 ------------------------------------------------------ (Exact name of Registrant as specified in its charter) California 95-3927330 ------------------------ ------------------------------------ (State of Incorporation) (I.R.S. Employer Identification No.) 3990-B Heritage Oak Court, Simi Valley, CA 93063 ------------------------------------------------------------ (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (805) 583-7744 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, without par value 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 by a 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. [X] As of October 26, 2001, the aggregate market value of the common equity held by non-affiliates of the registrant was approximately $34,073,187. The total shares of common stock without par value outstanding at October 26, 2001 was 12,600,751. DOCUMENTS INCORPORATED BY REFERENCE None PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information regarding executive officers of the Company is included in Part I of this report under the heading "Management." Information regarding the directors of the Company is set forth below.
Name Age Position ---- --- -------- William J. Gervais... 58 Chief Executive Officer, President and Director Richard A. Nelson.... 58 Vice President - Engineering, Secretary and Director Bruce E. Gladstone... 66 Director Robert E. Rich....... 51 Director Trude C. Taylor...... 79 Director Robert T. Webber..... 60 Director
William J. Gervais is a founder of Qualstar, 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, a former manufacturer of hard disk drives. Mr. Gervais earned a B.S. degree in Mechanical Engineering from California State Polytechnic University 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 in 1966. Bruce E. Gladstone has been a director of Qualstar since 1994. Since April 2000, Mr. Gladstone has served as Executive Vice President of 2KSounds, Inc., a company engaged in the production and distribution of music. In 1997, Mr. Gladstone was a co-founder of ComCore Semiconductor, a fabless semiconductor company, and served as its Vice President and as a director from 1997 until its sale in 1998. From 1996 until 1997, Mr. Gladstone was a consultant in the area of high technology startup companies. In 1990, Mr. Gladstone co-founded Chronology Corporation, a company that provides tools for electronic engineers, and served as an executive officer and director from 1990 until 1995. During the period 1974 through 1990, Mr. Gladstone founded and served as chief executive officer and president of three companies providing electronic engineering and software development tools. Mr. Gladstone began his career in electrical engineering and received B.S. and M.S. degrees in Engineering from the University of California, Los Angeles in 1957 and 1962. 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. Trude C. Taylor served as a director of Qualstar from October 1989 until December 1995, and rejoined our board in January 2000. Since 1984, Mr. Taylor has been a principal of TC Associates, a private investment firm. Mr. Taylor served as Chairman of the Board, Chief Executive Officer and a director of Zehntel Corporation, an automatic electronic test equipment manufacturer, from 1984 until 1988. Mr. Taylor was a founder and served as Chief Executive Officer, President and a director of EM&M Corporation, a computer components and memory products company, from 1961 until 1984, and served as its Chairman of the Board from 1984 until 1986. Mr. Taylor 2 served on the board of directors of Xylan Corporation until it was acquired by Alcatel S.A. in 1999, and currently serves on the board of directors of Plantronics, Inc. Mr. Taylor also serves as a trustee of Harvey Mudd College, and as an arbitrator for the New York Stock Exchange and the National Association of Securities Dealers, Inc. Mr. Taylor received a B.S. degree in Mechanical Engineering from the University of California, Los Angeles in 1949, and an M.B.A. degree from Harvard University in 1951. Robert T. Webber has served as a director of Qualstar since January 2000. Prior to his retirement in 1999, Mr. Webber was employed for 32 years by Lockheed-Martin Skunk Works and its predecessors, where he served in various positions, most recently as Chief Engineer and Division Manager for the Systems Requirements & Analysis Division. Mr. Webber currently serves on the executive board of the National Defense Industrial Association's Combat Survivability Division, a professional trade association. Mr. Webber received a B.S. degree in Engineering from the University of California, Los Angeles in 1963 and an M.B.A. degree from Pepperdine University in 1971. Directors are elected annually and hold office until the next annual meeting of shareholders and until their successors have been elected and qualified. Compliance with Section 16(a) of the Securities Exchange Act of 1934 Section 16(a) of the Securities Exchange Act of 1934, as amended, requires Qualstar's executive officers and directors, and persons who beneficially own more than ten percent of Qualstar's common stock, to file initial reports of ownership and reports of changes in ownership with the SEC and the National Association of Securities Dealers, Inc. Executive officers, directors and persons who beneficially own more than ten percent of Qualstar's common stock are required by SEC regulations to furnish Qualstar with copies of all Section 16(a) forms they file. Based solely upon our review of the copies of reporting forms furnished to Qualstar, and written representations that no other reports were required, we believe that all filing requirements under Section 16(a) of the Securities Exchange Act of 1934 applicable to directors, officers and any persons holding more than ten percent of Qualstar's common stock with respect to the fiscal year ended June 30, 2001, were satisfied on a timely basis. 3 ITEM 11. EXECUTIVE COMPENSATION The following table summarizes all compensation earned by our Chief Executive Officer and the four other most highly compensated executive officers whose total salary and bonus exceeded $100,000 for services rendered in all capacities to us during the fiscal year ended June 30, 2001. These individuals are referred to as our named executive officers in other parts of this report. The amounts shown below under "All Other Compensation" represent matching contributions under our 401(k) plan. Summary Compensation Table
Long Term Compensation Awards Annual Compensation ----------------------------- --------------------------- Name and Principal Position Year Salary ($) Bonus ($) Securities Underlying Options (#) All Other Compensation ($) ----------------------------------- ---- ---------- --------- --------------------------------- -------------------------- William J. Gervais 2001 $148,000 -- -- -- Chief Executive Officer 2000 145,600 $40,000 -- -- and President 1999 138,400 25,000 -- -- Richard A. Nelson 2001 133,200 -- -- $2,002 Vice President of Engineering 2000 131,040 20,000 -- 1,376 1999 126,720 15,000 -- 1,354 Daniel O. Thorlakson 2001 169,000 -- -- 2,027 Vice President of Operations 2000 166,400 25,000 -- 1,444 1999 155,600 20,000 -- 1,434 Robert K. Covey 2001 152,000 -- -- 1,670 Vice President of Marketing 2000 149,760 15,000 -- 1,481 1999 152,540 10,000 -- 1,483 Matthew Natalizio/(1)/ 2001 154,600 -- -- 1,367 Vice President and Chief 2000 69,240 15,000 97,200 574 Financial Officer
---------------- (1) Mr. Natalizio became an employee of Qualstar on January 10, 2000. Option Grants We did not grant any stock options to our named executive officers during the fiscal year ended June 30, 2001. 4 Options Exercised and Fiscal Year-End Values The following table sets forth information regarding options exercised by our named executive officers during the fiscal year ended June 30, 2001, the number of shares covered by both exercisable and unexercisable options as of June 30, 2001, and the value of unexercised in-the-money options held by our named executive officers as of June 30, 2001. Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
Value of Unexercised ------------------------------ In-the-Money Options at Number of Number of Securities Underlying ------------------------------ Shares Unexercised Options at June 30, 2001 June 30, 2001/(1)/ Acquired Value ------------------------------------ ------------------------------ Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable --------------------- ----------- -------- --------------- ----------------- ----------- ------------- William J. Gervais -- -- -- -- -- -- Richard A. Nelson -- -- -- -- -- -- Daniel O. Thorlakson -- -- -- -- -- -- Robert K. Covey -- -- -- -- -- -- Matthew Natalizio -- -- 24,300 72,900 $91,611 $274,833
___________________ (1) Represents the closing sale price of our common stock on June 29, 2001 ($6.55), less the exercise price per share, multiplied by the number of shares subject to the options held by the named executive officer. Compensation of Directors Each of our non-employee directors receives $2,000 per quarter as compensation for his service on the Board, and is reimbursed for expenses incurred in connection with attendance at Board meetings. Non-employee directors who serve on a committee of the Board also receive $500 for each committee meeting attended, excluding telephonic meetings, that is held on a day when the full Board is not also meeting. We have in the past granted non- employee directors options to purchase shares of our common stock pursuant to our 1985 Stock Option Plan. Directors are eligible to receive options and rights to purchase restricted stock under our 1998 Stock Incentive Plan. In January 2000, we granted to each of our four non-employee directors the right to purchase 54,000 shares of restricted stock at a price of $2.78 per share, which each director purchased with a full-recourse promissory note. We have the right to repurchase a director's restricted shares at the original purchase price upon termination of his service for any reason. Our repurchase right lapses and the director's shares vest at the rate of 25% per year of service following the date of grant. Compensation Committee Interlocks and Insider Participation in Compensation Decisions During the fiscal year ended June 30, 2001, the members of the Compensation Committee of our Board of Directors were Bruce E. Gladstone, Trude C. Taylor and Robert T. Webber. No executive officer 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. 5 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information with respect to the beneficial ownership of our common stock as of September 30, 2001 for: . each person (or group of affiliated persons) who we know beneficially owns more than 5% of our common stock; . each of our directors; . 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. Shares of common stock subject to options currently exercisable or exercisable within 60 days of September 30, 2001, 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, CA 93063.
------------------------------------------------------------ Shares Beneficially Percent of Shares Name of Beneficial Owner Owned Outstanding ------------------------------------------------------------ ------------------- ----------------- William J. Gervais.......................................... 2,969,850 23.5% Richard A. Nelson........................................... 2,097,750 16.6% Daniel O. Thorlakson........................................ 302,100 2.4% Robert K. Covey............................................. 182,000 1.4% Matthew Natalizio(1)........................................ 39,300 0.3% Bruce E. Gladstone(2)....................................... 54,000 0.4% Robert E. Rich(2)........................................... 131,400 1.0% Trude C. Taylor(2).......................................... 201,920 1.6% Robert T. Webber(2)......................................... 108,000 0.9% All directors and officers as a group (9 persons)(3)........ 6,086,320 48.2%
----------- (1) Includes 24,300 shares subject to stock options that are currently exercisable or exercisable within 60 days of, September 30, 2001. (2) Includes 40,500 shares that we have the right to repurchase if the shareholder's service on our board of directors terminates. Our repurchase right lapses as to 13,500 shares for each year of service on the board and will fully lapse as of January 14, 2004. (3) Includes 24,300 shares subject to stock options that are currently exercisable or exercisable within 60 days of September 30, 2001, and an aggregate of 162,000 shares subject to a right of repurchase in favor of Qualstar which lapses as to 54,000 shares each year and will fully lapse as of January 14, 2004. 6 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In January 2000 each of our four non-employee directors purchased 54,000 shares of restricted stock pursuant to our 1998 Stock Incentive Plan at a price of $2.78 per share, which was the fair market value of our stock on the date of grant as determined by our board of directors. Each director paid for his shares with a full-recourse promissory note in the amount of $150,000, secured by a pledge of the purchased shares. Payments of principal on the notes are due in four equal annual installments commencing on the second anniversary of the date of the note. Interest on the notes accrues at the rate of 6.21%, and is payable annually. As of September 30, 2001, the remaining principle balances owed under these promissory notes were $150,000 by Mr. Gladstone, $112,500 by Mr. Rich, $112,500 by Mr. Taylor, and $112,500 by Mr. Webber. 7 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: October 26, 2001 QUALSTAR CORPORATION 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 amendment on Form 10K/A has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ William J. Gervais Chief Executive Officer, President and Director October 26, 2001 -------------------------------------------- (principal executive officer) William J. Gervais /s/ Richard A. Nelson Vice President of Engineering, Secretary and Director October 26, 2001 -------------------------------------------- Richard A. Nelson /s/ Matthew Natalizio Vice President and Chief Financial Officer (principal October 26, 2001 -------------------------------------------- financial and accounting officer) Matthew Natalizio /s/ Bruce E. Gladstone Director October 26, 2001 -------------------------------------------- Bruce E. Gladstone /s/ Trude C. Taylor Director October 26, 2001 -------------------------------------------- Trude C. Taylor /s/ Robert E. Rich Director October 26, 2001 -------------------------------------------- Robert E. Rich /s/ Robert T. Webber Director October 26, 2001 -------------------------------------------- Robert T. Webber
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