Qualstar Corp (QBAK) SEC Filing 10-Q Quarterly report for the period ending Sunday, March 31, 2019

Exhibit 99.1

QUALSTAR REPORTS RESULTS FOR THE FOURTH QUARTER AND YEAR ENDING DECEMBER 31, 2018

Qualstar reports a 15.1% increase in revenue and a profit of $0.73 per share

Simi Valley, CA, March 7, 2019 — Qualstar Corporation (NASDAQ: QBAK), a leading manufacturer of data storage solutions and high-efficiency power supplies, today announced its financial results for the three and twelve-month periods ended December 31, 2018.

Year Ended December 31, 2018 Financial Results

Qualstar reported revenues of $12.2 million for the year ended December 31, 2018, an increase of 15.1% compared with $10.6 million for the year ended December 31, 2017. Net income for the year ended December 31, 2018, was $1.5 million or $0.73 per basic and $0.72 per diluted share. This compares with a net income for the year ended December 31, 2017, of $0.6 million, or $0.31 per basic and diluted share.

Data Storage segment revenues were $6.3 million for the year ended December 31, 2018, compared with $4.3 million for the same period last year, an increase of $2.0 million or 46.5%, primarily due to new reseller relationships, whose customers have a high demand for tape libraries and our partnership with Sony Imaging Products & Solutions Inc. to develop an enterprise-class optical disk archive library. Power supply segment revenues were $5.9 million for the year ended December 31, 2018, compared with $6.3 million in the year ended December 31, 2017, a decrease of $(0.4) million, or (6.3)%, primarily due to the variable life cycles of our customer’s production.

Gross margin was 41.0% of revenues, or $5.0 million, for the year ended December 31, 2018, an increase from the gross margin of 39.6% of revenues, or $4.2 million, for the year ended December 31, 2017.

Cash, cash equivalents and restricted cash were $4.9 million at December 31, 2018, compared to $4.8 million of cash, cash equivalents and restricted cash at December 31, 2017.

In December 2018, Qualstar entered into a stock buyback program permitting the Company to repurchase shares on the open market. The Company has repurchased 52,206 shares at an average share price of $5.26. Total spending for the program through March 1, 2019, was $0.3 million.

Quarter Ended December 31, 2018 Financial Results

Revenues for the quarter ended December 31, 2018, were $2.9 million, compared with $3.2 million for the quarter ended December 31, 2017, a decrease of $(0.3) million or (9.4)%. Income from operations for the quarter ended December 31, 2018, was $0.02 million compared with $0.7 million for the quarter ended December 31, 2017. Basic and diluted net income per share was $0.01 for the quarter ended December 31, 2018, compared to per share of $0.33 for the quarter ended December 31, 2017.

Data Storage segment revenues were $1.6 million for the quarter ended December 31, 2018, compared with $1.5 million for the same period last year, an increase of $0.1 million or 6.7%, primarily due to new reseller relationships, whose customers have a high demand for tape libraries. Power supply segment revenues were $1.3 million for the quarter, compared with $1.6 million in the quarter ended December 31, 2017, a decrease of $(0.3) million, or (18.8)%, due to the production cycles of our customers.

Gross margin was 31.0% of revenues or $0.9 million for the quarter ended December 31, 2018, a decrease from the gross margin of 43.8% of revenues or $1.4 million for the quarter ended December 31, 2017.

“We are extremely pleased with our overall performance for 2018, and groundwork that has been put in place for future growth. We will continue to expand our product offerings through organic efforts and pursue complementary acquisitions,” said Steven N. Bronson, Chief Executive Officer and President of Qualstar.