Qualstar : Quarterly Report for the Nine Months Ended September 30, 2022 and 2021

Qualstar Corporation and Subsidiaries

Quarterly Report

For the Periods Ended September 30, 2022 and 2021

Qualstar Corporation

1 Jenner, Suite 200

Irvine, CA 92618

Phone: [phone]

www.qualstar.com

QUALSTAR CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
	Page
	No.
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Condensed Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Condensed Consolidated Statements of Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Condensed Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Notes to Condensed Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . .	18

Item 1. Financial Statements

QUALSTAR CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)

(unaudited)

	September 30,	December 31,
		2022		2021
Assets
Current assets:
Cash and cash equivalents	$	2,633	$	4,095
Restricted cash		100		100
Accounts receivable, net		1,434		1,354
Inventories		2,990		2,276
Prepaid expenses and other current assets		250		304
Total current assets		7,407		8,129
Property and equipment, net		92		124
Right-of-use assets		281		300
Deferred tax assets		30		30
Other assets		40		24
Total assets	$	7,850	$	8,607
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	709	$	977
Accrued payroll and related liabilities		125		188
Deferred service revenue		664		622
Lease liabilities, current		162		117
Other accrued liabilities		206		168
Total current liabilities		1,866		2,072
Long-term liabilities:
Lease liabilities, long-term		138		204
Deferred service revenue, long-term		481		447
Other long-term liabilities		27		28
Total long-term liabilities		646		679
Total liabilities		2,512		2,751
Commitments and contingencies (Note 8)
Shareholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized; no shares
issued		-		-
Common stock, no par value; 50,000,000 shares authorized;
1,749,345 shares issued and outstanding at September 30, 2022,
1,884,033 shares issued and outstanding at December 31, 2021		18,490		18,789
Accumulated deficit		(13,152)		(12,933)
Total shareholders' equity		5,338		5,856
Total liabilities and shareholders' equity	$	7,850	$	8,607

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QUALSTAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

			Three Months Ended			Nine Months Ended
			September 30,			September 30,
			2022		2021			2022		2021
Revenues	$	2,746	$	2,095		$	7,019	$	6,721
Cost of goods sold			1,902		1,439			4,971		4,537
Gross profit			844		656			2,048		2,184
Operating expenses:
Engineering			102		114			270		375
Sales and marketing			249		342			908		1,106
General and administrative			345		346			1,005		708
Total operating expenses			696		802			2,183		2,189
Income (loss) from operations			148		(146)			(135)		(5)
Other income (expense), net			(17)		(2)			(84)		(1)
Income (loss) before income taxes			131		(148)			(219)		(6)
Provision for income taxes			-		-			-		-
Net income (loss)		$	131	$	(148)		$	(219)	$	(6)
Earnings (loss) per share:
Basic and diluted	$	0.07	$	(0.08)	$	(0.12)	$	0.00
Weighted average common shares outstanding:
Basic and diluted			1,857		1,943			1,875		1,949

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QUALSTAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands)

(unaudited)

		Common Stock		Accumulated
Three Months Ended September 30, 2022		Shares		Amount		Deficit		Total
Balances at July 1, 2022		1,884	$	18,789	$	(13,283)	$	5,506
Share repurchases	(135)		(299)		-		(299)
Net income	-		-		131		131
Balances at September 30, 2022	1,749	$	18,490	$	(13,152)	$	5,338

		Common Stock		Accumulated
Nine Months Ended September 30, 2022		Shares		Amount		Deficit		Total
Balances at January 1, 2022		1,884	$	18,789	$	(12,933)	$	5,856
Share repurchases	(135)		(299)		-		(299)
Net (loss)	-		-		(219)		(219)
Balances at September 30, 2022	1,749	$	18,490	$	(13,152)	$	5,338

	Common Stock		Accumulated
Three Months Ended September 30, 2021	Shares		Amount		Deficit		Total
Balances at July 1, 2021	1,953	$	18,990	$	(13,221)	$	5,769
Share repurchases	(61)		(183)		-		(183)
Net (loss)	-		-		(148)		(148)
Balances at September 30, 2021	1,892	$	18,807	$	(13,369)	$	5,438

		Common Stock		Accumulated
Nine Months Ended September 30, 2021		Shares		Amount		Deficit		Total
Balances at January 1, 2021	1,950	$	18,980	$	(13,363)	$	5,617
Share repurchases	(61)		(183)		-		(183)
Share-based compensation	3		10		-		10
Net (loss)	-		-		(6)		(6)
Balances at September 30, 2021		1,892	$	18,807	$	(13,369)	$	5,438

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