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**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** |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------|

**OR        THE FISCAL YEAR ENDED JUNE 30, 2007**

| ** ̈** | **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**

**DOCUMENTS        INCORPORATED BY REFERENCE**

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**TABLE        OF CONTENTS**

| **PART                  III** |                                                                                                                             |   |
|-------------------------------|----------------------------------------------------------------------------------------------------------------------------------|--------|
| Item                  10.     | Directors,                  Executive Officers and Corporate                  Governance                                         | 3      |
| Item                  11.     | Executive                  Compensation                                                                                          | 4      |
| Item                  12.     | Security                  Ownership of Certain Beneficial Owners and Management                  and Related Stockholder Matters | 12     |
| Item                  13.     | Certain                  Relationships and Related Transactions, and Director                  Independence                      | 13     |
| Item                  14.     | Principal                  Accountant Fees and Services                                                                          | 13     |
|                          |                                                                                                                             |   |
|                          | Signatures                                                                                                                       | 15     |
|                          | Exhibit                  Index                                                                                                   | 16     |

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*Table            of Contents*

**ITEM        10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE        GOVERNANCE**

| **Name**                            |   | **Age** |   | **Position**                                                                |
|-------------------------------------|--------|---------|--------|-----------------------------------------------------------------------------|
| William                  J. Gervais |   | 64      |   | Chief                  Executive Officer, President and Director            |
| Richard                  A. Nelson  |   | 64      |   | Vice                  President — Engineering, Secretary and Director |
| Stanley                  W. Corker  |   | 56      |   | Director                                                                    |
| Carl                  W. Gromada    |   | 66      |   | Director                                                                    |
| Robert                  A. Meyer    |   | 62      |   | Director                                                                    |
| Robert                  E. Rich     |   | 57      |   | Director                                                                    |

**Section        16(a) Beneficial Ownership Reporting Compliance**

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*Table            of Contents*

**Code        of Ethics**

**Audit        Committee**

| **ITEM                  11.** | **EXECUTIVE                  COMPENSATION** |
|-------------------------------|---------------------------------------------|

**COMPENSATION        DISCUSSION AND ANALYSIS**

**Executive        Compensation Program Objectives**

**Executive        Officer Compensation Elements**

***Base        Salaries***

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*Table            of Contents*

| **Name                    and Principal Position **                                                               |   | **Fiscal                    2007 Base Salary** |    |      |   | **Percent                    Increase versus Fiscal 2006 Base                    Salary** |   |   | **Fiscal                    2008 Base Salary** |   |   |    | **Percent                    Increase versus Fiscal 2007 Base                    Salary** |   |
|------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|---------|-----------|--------|------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------|--------|--------|---------|------------------------------------------------------------------------------------------------|--------|
| William                  J. GervaisChief                  Executive Officer and President                              |   | $                                                   | 195,000 |      |   |                                                                                           |   | 5.4    | %                                                   |   | $      | 195,000 |                                                                                           |   |   | ─ |   |
|                                                                                                                   |   |                                                |    |      |   |                                                                                           |   |   |                                                |   |   |    |                                                                                           |   |   |   |   |   |
| Andrew                  A. Farina (1)Vice                  President and Chief Financial                  Officer |   | $                                                   | 165,000 |      |   |                                                                                           |   | (1     | )                                                   |   | $      | 170,000 |                                                                                           |   |   |   | 3.0 | % |
|                                                                                                                   |   |                                                |    |      |   |                                                                                           |   |   |                                                |   |   |    |                                                                                           |   |   |   |   |   |
| Richard                  A. NelsonVice                  President of Engineering                                       |   | $                                                   | 170,000 |      |   |                                                                                           |   | 16.4   | %                                                   |   | $      | 170,000 |                                                                                           |   |   | ─ |   |
|                                                                                                                   |   |                                                |    |      |   |                                                                                           |   |   |                                                |   |   |    |                                                                                           |   |   |   |   |
| Robert                  K. CoveyVice                  President of Marketing                                           |   | $                                                   | 172,000 |      |   |                                                                                           |   | 3.0    | %                                                   |   | $      | 172,000 |                                                                                           |   |   | ─ |   |
|                                                                                                                   |   |                                                |    |      |   |                                                                                           |   |   |                                                |   |   |    |                                                                                           |   |   |   |   |
| Robert                  C. KingVice                  President of Sales                                                |   | $                                                   | 171,000 |  (2) |   |                                                                                           |   | 3.0    | %                                                   |   | $      | 171,000 |  (2)                                                                                      |   |   | ─ |   |

| (1) | Mr.                  Farina’s employment commenced on November 27,                  2006. |
|-----|-------------------------------------------------------------------------------------------------|

| (2) | The                  amounts shown for Mr. King includes an allowance of $6,000 per                  year for                  automobile expenses. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------|

***Cash        Bonuses***

***Equity-Based        Compensation***

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*Table            of Contents*

***Compensation        of our Named Executive Officers***

**Tax        Considerations**

**COMPENSATION          COMMITTEE 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**

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*Table            of Contents*

**EXECUTIVE        COMPENSATION**

**Summary        Compensation Table**

**Fiscal        2007 Summary Compensation Table**

| **Name                    and Principal Position**                                                                                                                                                                                                                                                                                 |   | **Year** |   | **Salary (1)****($)** |    |   | **Bonus (1)****($)** |   |    | **Option                    Awards (2)****($)** |   |   | **All                    Other Compensation (3)****($)** |   |   | **Total****($)** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------|---------|--------|---------------------------|--------|---------|------------------------------------------------------|--------|--------|---------------------------------------------------------------|--------|--------|------------------|--------|
| William                  J.                  Gervais                                    Chief                  Executive Officer and President |   | 2007     |   | $                          | 193,000 |   |                      | $      | — |                                                 |   | $      | —                                                       |   |   | $                | 3,868  |   |   | $ | 196,868 |   |
|                                                                                                                                                                                                                                                                                                                               |   |     |   |                       |    |   |                      |   |    |                                                 |   |   |                                                          |   |   |             |   |   |   |   |   |   |
| Andrew                  A. Farina (4)Vice                  President and Chief Financial Officer                                                                                                                                                                                                                                   |   | 2007     |   |                       | 92,000  |   |                      |   | — |                                                 |   |   | 6,017                                                         |   |   |             | 286    |   |   |   | 98,303 |   |
|                                                                                                                                                                                                                                                                                                                               |   |     |   |                       |    |   |                      |   |    |                                                 |   |   |                                                          |   |   |             |   |   |   |   |   |   |
| Richard                  A.                  Nelson                                    Vice                  President of Engineering          |   | 2007     |   |                       | 164,000 |   |                      |   | — |                                                 |   |   | —                                                       |   |   |             | 6,545  |   |   |   | 170,545 |   |
|                                                                                                                                                                                                                                                                                                                               |   |     |   |                       |    |   |                      |   |    |                                                 |   |   |                                                          |   |   |             |   |   |   |   |   |   |
| Robert                  K.                  Covey                                    Vice                  President of Marketing              |   | 2007     |   |                       | 171,000 |   |                      |   | — |                                                 |   |   | —                                                       |   |   |             | 3,962  |   |   |   | 174,962 |   |
|                                                                                                                                                                                                                                                                                                                               |   |     |   |                       |    |   |                      |   |    |                                                 |   |   |                                                          |   |   |             |   |   |   |   |   |   |
| Robert                  C.                  King                                    Vice                  President of Sales                   |   | 2007     |   |                       | 169,000 |   |                      |   | 14,000  |                                                 |   |   | 21,894                                                        |   |   |             | 5,724  |   |   |   | 210,618 |   |
|                                                                                                                                                                                                                                                                                                                               |   |     |   |                       |    |   |                      |   |    |                                                 |   |   |                                                          |   |   |             |   |   |   |   |   |   |
| Frederic                  T. Boyer (5)Vice                  President and Chief Financial Officer                                                                                                                                                                                                                                  |   | 2007     |   |                       | 42,000  |   |                      |   | — |                                                 |   |   | (30,146                                                       | )      |   |             | 2,866  |   |   |   | 14,720 |   |

| (1) | The                  amounts shown in these columns reflect salary and bonuses earned                  by the                  named executive officers during fiscal year 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 year 2007 for financial statement reporting                  purposes                  with respect to the fair value of stock options granted during                  fiscal 2007                  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.  As a result of Mr. Boyer’s                  resignation as of August 18, 2006, he forfeited stock options for                  100,000                  shares.  The compensation expense with respect to Mr. Boyer’s                  options that vested in fiscal 2007, less the reversal of amounts                  previously accrued relating to his forfeited options, resulted                  in a net                  credit of $30,146 recognized by Qualstar in fiscal 2007.  This                  amount is included in the table above.  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 |
|-----|---------------------------------------------------------------------------------------------------|

| (5) | Mr.                  Boyer resigned effective as of August 18,                  2006. |
|-----|---------------------------------------------------------------------------------------|

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*Table            of Contents*

**Grants        of Plan-Based Awards**

**Grants        of Plan-Based Awards in Fiscal Year 2007**

| **Name**                            |   | **Grant                    Date** |    |   | **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   |   | 12/14/2006                        |    |   |                                                                                                              | 50,000 |    |                                                                                                      | $      | 2.88   |                                                                                                          |   | $ | 56,152 |   |
| Richard                  A. Nelson  |   |                              | — |   |                                                                                                              |   | — |                                                                                                      |   |   | —                                                                                                       |   |   |   | — |   |
| Robert                  K. Covey    |   |                              | — |   |                                                                                                              |   | — |                                                                                                      |   |   | —                                                                                                       |   |   |   | — |   |
| Robert                  C. King     |   | 12/14/2006                        |    |   |                                                                                                              | 50,000 |    |                                                                                                      |   | 2.88   |                                                                                                          |   |   | 56,152 |   |
| Frederic                  T. Boyer  |   |                              | — |   |                                                                                                              |   | — |                                                                                                      |   |   | —                                                                                                       |   |   |   | — |   |

| (1) | The                  amounts shown in this column represent the number of shares of                  common                  stock underlying stock options granted in fiscal year 2007 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 2007, 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 2007 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. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**Outstanding        Equity Awards**

**Outstanding        Equity Awards at 2007 Fiscal Year End**

|                                   |   | **Option                    Awards**                                                              |    |
|----------------------------------------|--------|---------------------------------------------------------------------------------------------------|---------|
|                                   |   | **Number                    of Securities Underlying Unexercised Options                    (#)** |    |   | **Option                  Exercise** |   |   | **Option                  Expiration** |   |
| **Name**                               |   | **Exercisable**                                                                                   |    |   | **Unexercisable (1)** |   |   | **Price                    ($)** |   |   | **Date** |   |
| William                  J. Gervais    |   |                                                                                              | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Andrew                  A. Farina      |   |                                                                                              | — |   |   |   | 50,000 |   |   | $ | 2.88 |   |   | 12/14/2016 |   |
| Richard                  A. Nelson     |   |                                                                                              | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Robert                  K. Covey       |   |                                                                                              | 20,000  |   |   |   | — |   |   |   | 5.94 |   |   | 01/03/2012 |   |
| Robert                  C. King        |   |                                                                                              | 25,000  |   |   |   | 25,000 |   |   |   | 3.71 |   |   | 06/15/2015 |   |
|                                   |   |                                                                                              | — |   |   |   | 50,000 |   |   |   | 2.88 |   |   | 12/14/2016 |   |
| Frederic                  T. Boyer (2) |   |                                                                                              | — |   |   |   | — |   |   |   | — |   |   |   | — |   |

**______________**

| (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. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Frederic                  T. Boyer resigned effective as of August 18,                  2006. |
|-----|-----------------------------------------------------------------------------------------------|

**Option        Exercises**

**Option          Exercises in Fiscal Year 2007**

|                                                                                                                                                                                                                                                                                                                                                                                                                 |   | **Option                    Awards**                                                              |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|---------|
| **Name**                                                                                                                                                                                                                                                                                                                                                                                                             |   | **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                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                              | — |   |   |   | — |   |
| Frederic                  T. Boyer                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                              | — |   |   |   | — |   |
| ____________                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                              |    |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                              |    |   |   |   |   |   |
| (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.         |

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*Table            of Contents*

**Director        Compensation**

**Fiscal          Year 2007 Director Compensation Table**

| **Name**                           |   | **Fees Earned or                    Paid in Cash (1)****($)** |   |   | **Option****Awards (2)(3)****($)** |   |   | **Total****($)** |   |
|------------------------------------|--------|----------------------------------------------------------------------------------------|--------|--------|-----------------------------------------|--------|--------|------------------|--------|
| Stanley                  W. Corker |   | $                                                                                      | 19,250 |   |                                    | $      | 5,760  |             |   | $ | 25,010 |   |
| Carl                  W. Gromada   |   |                                                                                   | 19,250 |   |                                    |   | 5,760  |             |   |   | 25,010 |   |
| Robert                  A. Meyer   |   |                                                                                   | 17,500 |   |                                    |   | 5,760  |             |   |   | 23,260 |   |
| Robert                  E. Rich    |   |                                                                                   | 11,250 |   |                                    |   | 5,760  |             |   |   | 17,010 |   |

| (1) | The                  amounts shown in this column represent the amount of cash compensation                  earned in fiscal year 2007 for service on the Board of Directors                  and any                  committees of the Board on which the director was a member in fiscal                  2007. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The                  amounts shown in this column represent the compensation expense                  recognized                  by Qualstar in fiscal year 2007 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 2007.  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, 2007, each of our non-employee directors named in the                  above                  table held unexercised stock options for 24,000 shares of our common                  stock. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**Potential        Benefits Upon or Following a Change in Control**

**Estimated          Benefits at 2007 Fiscal Year End in the Event of a Change in          Control**

| **Name**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | **Option                    Awards (1)** |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|
| William                  J. Gervais                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                          | — |   |
| Andrew                  A. Farina                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $                                             | 38,500  |   |
| Richard                  A. Nelson                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                          | — |   |
| Robert                  K. Covey                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                          | — |   |
| Robert                  C. King                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $                                             | 38,500  |   |
| Frederic                  T. Boyer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                          | — |   |
| ________________                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                          |    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                          |    |   |
| (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 29,                  2007                  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 $3.65 per                  share.     |

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*Table            of Contents*

| **ITEM                  12.** | **SECURITY                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                  AND RELATED STOCKHOLDER                  MATTERS** |
|-------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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. |
|--------|--------|-------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                 |   | **Common                      Shares** |      |   | **Options                      Exercisable Within 60** |   |    | **Beneficial                    Ownership** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|-----------|--------|--------------------------------------------------------|--------|---------|---------------------------------------------|--------|
| **Name**                                                                                                                                                                                             |   | **Owned**                              |      |   | **Days (1)**                                      |   |    | **Number**                                  |   |   | **Percent** |   |
|                                                                                                                                                                                                 |   |                                   |      |   |                                                   |   |    |                                        |   |   |   |   |
| William                    J. Gervais                                                                                                                                                                |   |                                   | 2,923,450 |   |                                                   |   | — |                                        |   |   | 2,923,450 |   |   |   | 23.9 | % |
| Richard                    A. Nelson                                                                                                                                                                 |   |                                   | 1,906,560 |   |                                                   |   | — |                                        |   |   | 1,906,560 |   |   |   | 15.6 | % |
| Wells                    Capital Management Inc.(2) 525                    Market Street, 10th                    Floor    San                    Francisco, CA  94105 |   |                                   | 1,582,754 |   |                                                   |   | — |                                        |   |   | 1,582,754 |   |   |   | 12.9 | % |
| Wellington                    Management (3) 75                    State Street    Boston,                    MA  02109                                                |   |                                   | 1,019,173 |   |                                                   |   | — |                                        |   |   | 1,019,173 |   |   |   | 8.1 | % |
| Stanley                    W. Corker                                                                                                                                                                 |   |                                   | 3,940     |   |                                                   |   | 6,000   |                                        |   |   | 9,940 |   |   |   | * |   |
| Carl                    Gromada                                                                                                                                                                      |   |                                   | 48,271    |   |                                                   |   | 6,000   |                                        |   |   | 54,271 |   |   |   | * |   |
| Robert                    A. Meyer                                                                                                                                                                   |   |                                   | —   |   |                                                   |   | 6,000   |                                        |   |   | 6,000 |   |   |   | * |   |
| Robert                    E. Rich                                                                                                                                                                    |   |                                   | 131,400   |   |                                                   |   | 6,000   |                                        |   |   | 137,400 |   |   |   | 1.1 | % |
| Robert                    K. Covey                                                                                                                                                                   |   |                                   | 48,280    |   |                                                   |   | 20,000  |                                        |   |   | 68,280 |   |   |   | * |   |
| Andrew                    A. Farina                                                                                                                                                                  |   |                                   | —   |   |                                                   |   | — |                                        |   |   | — |   |   |   | — |   |
| David                    L. Griffith                                                                                                                                                                 |   |                                   | —   |   |                                                   |   | 80,000  |                                        |   |   | 80,000 |   |   |   | * |   |
| Robert                    C. King                                                                                                                                                                    |   |                                   | —   |   |                                                   |   | 25,000  |                                        |   |   | 25,000 |   |   |   | * |   |
| Frederic                    T. Boyer (4)                                                                                                                                                             |   |                                   | —   |   |                                                   |   | — |                                        |   |   | — |   |   |   | * |   |
| All                    directors and officers as a group (11 persons)                                                                                                                                |   |                                   | 5,061,901 |   |                                                   |   | 149,000 |                                        |   |   | 5,210,901 |   |   |   | 42.0 | % |

|   | (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                  15,                  2007. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (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 1,582,754 shares as of December 31,                  2006. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Based                  on information contained in reports filed with the Securities and                  Exchange                  Commission, Wellington Management Company, LLP, in its capacity                  as an                  investment adviser, beneficially owns 993,356 shares as of December                  31,                  2006. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Frederic                  T. Boyer resigned as Chief Financial Officer and as an employee                  effective                  as of August 18, 2006. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Table            of Contents*

**Additional        Equity Compensation Plan Information**

| **ITEM                  13.** | **CERTAIN                  RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR                  INDEPENDENCE** |
|-------------------------------|-----------------------------------------------------------------------------------------------------------------|

**Transactions        with Related Persons**

**Director        Independence**

| **ITEM                  14.** | **PRINCIPAL                  ACCOUNTANT FEES AND                  SERVICES** |
|-------------------------------|------------------------------------------------------------------------------|

**Fees        Paid to Independent Accounts**

|                                |   | **Fiscal****2006** |    |   | **Fiscal****2007** |   |
|-------------------------------------|--------|--------------------|---------|--------|--------------------|--------|
| Audit                  Fees         |   | $                  | 156,653 |   |               | $      | 189,400 |   |
| Audit-related                  fees |   |               | 9,457   |   |               |   | 2,784 |   |
| Tax                  fees           |   |               | 78,235  |   |               |   | 87,637 |   |
| All                  other fees     |   |               | — |   |               |   | — |   |
| Total                  fees         |   | $                  | 244,345 |   |               | $      | 279,821 |   |

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*Table            of Contents*

**Audit        Committee Pre-Approval Policies and Procedures**

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*Table            of Contents*

**SIGNATURES**

|                                    |   | QUALSTAR                  CORPORATION  |                                                   |
|-----------------------------------------|--------|---------------------------------------------|--------------------------------------------------------|
|                                    |   |                                        |                                                   |   |
| Date:                  October 29, 2007 |   | By:                                         | /s/  WILLIAM                  J. GERVAIS     |   |
|                                    |   |                                        | William                  J. Gervais,                   |   |
|                                    |   |                                        | Chief                  Executive Officer and President |   |

| **Signature**                                        |   | **Title**                                      |   | **Date**                          |
|------------------------------------------------------|--------|------------------------------------------------|--------|-----------------------------------|
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
| /s/  WILLIAM                    J. GERVAIS |   | Chief                  Executive Officer,      |   | October                  29, 2007 |
| William                  J. Gervais                  |   | President                  and Director        |   |                              |
|                                                 |   | (principal                  executive officer) |   |                              |
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
| /s/  RICHARD                    A. NELSON  |   | Vice                  President, Engineering   |   | October                  29, 2007 |
| Richard                  A. Nelson                   |   | Secretary                  and Director        |   |                              |
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
| /s/  CARL                    W. GROMADA    |   | Director                                       |   | October                  29, 2007 |
| Carl                  W. Gromada                     |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
| /s/  STANLEY                    W. CORKER  |   | Director                                       |   | October                  29, 2007 |
| Stanley                  W. Corker                   |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
| /s/  ROBERT                    E. RICH     |   | Director                                       |   | October                  29, 2007 |
| Robert                  E. Rich                      |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
| /s/  ROBERT                    A. MEYER    |   | Director                                       |   | October                  29, 2007 |
| Robert                  A. Meyer                     |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
|                                                 |   |                                           |   |                              |
| /s/  ANDREW                    A. FARINA   |   | Vice-President                  and CFO        |   | October                  29, 2007 |
| Andrew                  A. Farina                    |   | (principal                  financial officer) |   |                              |

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*Table            of Contents*

**EXHIBIT        INDEX**

| **Exhibit****No.** |   | **Description**                                                                                                                                   |
|--------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1(1)             |   | Restated                  Articles of Incorporation.                                                                                              |
| 3.2(1)             |   | Amended                  and Restated Bylaws.                                                                                                     |
| 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.                                                                        |
| 31.1               |   | Certification                  of Principal Executive Officer pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002.         |
| 31.2               |   | Certification                  of Principal Financial Officer pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002.         |
| 32.1               |   | Certification                  of Principal Executive Officer pursuant to Section 906 of the                  Sarbanes-Oxley Act of 2002.         |
| 32.2               |   | 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. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| * | 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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