Qualstar : Quarterly Report for the Six Months Ended June 30, 2022 and 2021

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Qualstar Corporation and Subsidiaries

Quarterly Report

For the Periods Ended June 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)

			June 30,	December 31,
			2022		2021
Assets
Current assets:
Cash and cash equivalents	$	2,972	$	4,095
Restricted cash			100		100
Accounts receivable, net			1,093		1,354
Inventories			3,067		2,276
Prepaid expenses and other current assets			184		304
Total current assets			7,416		8,129
Property and equipment, net			101		124
Right-of-use assets			318		300
Deferred tax assets			30		30
Other assets			21		24
Total assets	$	7,886	$	8,607
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	622	$	977
Accrued payroll and related liabilities			140		188
Deferred service revenue			616		622
Lease liabilities, current			158		117
Other accrued liabilities			177		168
Total current liabilities			1,713		2,072
Long-term liabilities:
Lease liabilities, long-term			180		204
Deferred service revenue, long-term			459		447
Other long-term liabilities			28		28
Total long-term liabilities			667		679
Total liabilities			2,380		2,751
Commitments and contingencies (Note 7)
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;
1,884,033 shares issued and outstanding at both June 30, 2022 and
December 31, 2021			18,789		18,789
Accumulated deficit			(13,283)		(12,933)
Total shareholders' equity			5,506		5,856
Total liabilities and shareholders' equity		$	7,886	$	8,607

1

QUALSTAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

		Three Months Ended				Six Months Ended
		June 30,					June 30,
		2022		2021				2022		2021
Revenues	$	1,863	$	2,929		$	4,273	$	4,626
Cost of goods sold		1,382		1,847				3,069		3,098
Gross profit		481		1,082				1,204		1,528
Operating expenses:
Engineering		118		87				168		261
Sales and marketing		336		359				659		764
General and administrative		348		74				660		362
Total operating expenses		802		520				1,487		1,387
Income (loss) from operations		(321)		562				(283)		141
Other income (expense), net		(68)		2				(67)		1
Income (loss) before income taxes		(389)		564				(350)		142
Provision for income taxes		-		-				-		-
Net income (loss)	$	(389)	$	564		$	(350)	$	142
Earnings (loss) per share:
Basic and diluted	$	(0.21)	$	0.29	$	(0.19)	$	0.07
Weighted average common shares outstanding:
Basic and diluted		1,884		1,953				1,884		1,953

2

QUALSTAR CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands)

(unaudited)

	Common Stock		Accumulated
Three Months Ended June 30, 2022	Shares		Amount		Deficit		Total
Balances at April 1, 2022	1,884	$	18,789	$	(12,894)	$	5,895
Net (loss)	-		-		(389)		(389)
Balances at June 30, 2022	1,884	$	18,789	$	(13,283)	$	5,506

	Common Stock		Accumulated
Six Months Ended June 30, 2022	Shares		Amount		Deficit		Total
Balances at January 1, 2022	1,884	$	18,789	$	(12,933)	$	5,856
Net (loss)	-		-		(350)		(350)
Balances at June 30, 2022	1,884	$	18,789	$	(13,283)	$	5,506

	Common Stock		Accumulated
Three Months Ended June 30, 2021	Shares		Amount		Deficit		Total
Balances at April 1, 2021	1,953	$	18,990	$	(13,785)	$	5,205
Net income	-		-		564		564
Balances at June 30, 2021	1,953	$	18,990	$	(13,221)	$	5,769

	Common Stock		Accumulated
Six Months Ended June 30, 2021	Shares		Amount		Deficit		Total
Balances at January 1, 2021	1,950	$	18,980	$	(13,363)	$	5,617
Share repurchases	3		10		-		10
Net income	-		-		142		142
Balances at June 30, 2021	1,953	$	18,990	$	(13,221)	$	5,769

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