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




FOR THE FISCAL YEAR ENDED JUNE 30, 2011





o
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




Indicate by check mark whether the registrant is well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933.  Yes  ̈     No T




Indicate by check mark whether the registrant is not required to file reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934.  Yes  ̈     No T




Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.  Yes T     No  ̈




Indicate by check mark whether the registrant has submitted electronically and posted on its website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o No o




Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of  “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o    Accelerated filer o     Non-accelerated filer q    Smaller reporting company  T





Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).  Yes  ̈     No T




As of December 31, 2010, (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the common equity held by non-affiliates of the registrant was approximately $14,550,000 based on the closing sales price as reported on the NASDAQ Stock Market. As of September 30, 2011, there were 12,253,117 shares of common stock without par value outstanding.





DOCUMENTS INCORPORATED BY REFERENCE




None









TABLE OF CONTENTS
  PART IIIItem 10.
Directors, Executive Officers and Corporate Governance
3Item 11.
Executive Compensation
4Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
11Item 13.
Certain Relationships and Related Transactions, and Director Independence
12Item 14.
Principal Accountant Fees and Services
12Signatures
14Exhibit Index
15
 
 2
 
 ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  A list of our executive officers and biographical information appears in Part I, Item 1 of this report under the caption “Executive Officers of the Registrant.”  The current members of our Board of Directors and biographical information is set forth below:
  Name

Age

PositionWilliam J. Gervais

68

Chief Executive Officer, President and DirectorRichard A. Nelson

68

DirectorStanley W. Corker

60

DirectorLawrence D. Firestone

53

DirectorCarl W. Gromada

70

DirectorRobert A. Meyer

66

DirectorRobert E. Rich

61

Director
 
 William J. Gervais is a founder of Qualstar and has been our President and a director since our inception in 1984, and was elected Chief Executive Officer in January 2000. From 1984 until January 2000, Mr. Gervais also served as our Chief Financial Officer. From 1981 until 1984, Mr. Gervais was President of Northridge Design Associates, Inc., an engineering consulting firm. Mr. Gervais was a co-founder, and served as Engineering Manager from 1976 until 1981, of Micropolis Corporation. Mr. Gervais earned a B.S. degree in Mechanical Engineering from California State Polytechnic University, Pomona in 1967.
 
 Richard A. Nelson is a founder of Qualstar and has been a director since our inception in 1984. Mr. Nelson also served as our Vice President of Engineering and Secretary from our inception in 1984 until January 28, 2011, when he retired as an employee and officer. From 1974 to 1984, Mr. Nelson was self-employed as an engineering consultant specializing in microprocessor technology. Mr. Nelson earned a B.S. in Electronic Engineering from California State Polytechnic University, Pomona in 1966.
 
 Stanley W. Corker has served as a director of Qualstar since January 2006.  Since 1996, Mr. Corker has been the Director of Technology Research and a partner of Emerald Asset Management, a diversified investment management firm.  Prior to joining Emerald Asset Management, Mr. Corker obtained over 20 years experience in the computer storage industry from key roles in engineering and marketing at several manufacturers of tape drives, and as an industry analyst with International Data Corporation (IDC).  Mr. Corker received a B.S. degree in Computer Science from the University of Essex, England in 1972, where he later conducted five years of postgraduate research in
computer networking systems.
 
 Lawrence D. Firestone has served as a director of Qualstar since May 13, 2011. He currentlyis the Chief Financial Officer of Xiotech Corporation, a leading supplier of performance driven enterprise storage, a position he has held since February 2011.  From August 2006 to August 2010, Mr. Firestone was Executive Vice President and Chief Financial Officer of Advanced Energy Industries, Inc. (AEIS) a leading provider of power conversion devices for the semi-conductor and solar inverter markets. From 1999 until August 2006, Mr. Firestone served as the Senior Vice President and Chief Financial Officer and secretary and treasurer at Applied Films Corporation, (AFCO) a leading supplier of thin film deposition
equipment. Prior to joining Applied Films, Mr. Firestone served as Vice President and Chief Operating Officer of Avalanche Industries, a contract manufacturer of custom cables and harnesses, from 1996 to 1999. Mr. Firestone served as a director of Amtech Systems, Inc. from 2005 to 2007 and as a director of Hyperspace Communications, Inc. from 2004 to 2005.  Mr. Firestone received a BSBA degree in Accounting from Slippery Rock State College in 1981.
 
 Carl W. Gromada has served as a director of Qualstar since March 2005.  From 2000 to the present, Mr. Gromada has been a consultant and a private investor. From 1996 to 2000, Mr. Gromada served as Chief Executive Officer, and a member of the board of directors of Computer Resources Unlimited, Inc., a company involved in the design, manufacture and sale of a broad line of products for the computer storage industry.  Mr. Gromada received a B.S. degree in Business Administration from Temple University in 1965.
 
 Robert A. Meyer has served as a director of Qualstar since March 2006.  Mr. Meyer is currently retired.  From 1994 until June 2005, Mr. Meyer was employed in various management positions by United States Filter Corporation, a company engaged in the water treatment industry serving industrial, commercial and residential customers.  His positions at United States Filter Corporation included Director of Finance, Business Development from 2000 to 2002, and Vice President of Internal Audit from 2003 until he retired in June 2005.  Mr. Meyer received a B.S. degree in Accounting from C.W. Post College in 1972, and he is a Certified Public Accountant.
 
 3
 Robert E. Rich has served as a director of Qualstar since January 2000.  Mr. Rich has been engaged in the private practice of law since 1975 and has been a shareholder of Stradling Yocca Carlson & Rauth, legal counsel to Qualstar, since 1984.  Mr. Rich received a B.A. degree in Economics from the University of California, Los Angeles in 1972 and his J.D. degree from the University of California, Los Angeles in 1975.
 
 Directors are elected annually and hold office until the next annual meeting of shareholders and until their successors have been elected and qualified.
  Section 16(a) Beneficial Ownership Reporting Compliance
  Section 16(a) of the Securities Exchange Act of 1934 requires Qualstar’s directors and executive officers, and persons who own more than ten percent of Qualstar’s common stock, to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our common stock.  Officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish Qualstar with copies of all Section 16(a) forms they file.
  To our knowledge, based solely on a review of the copies of Section 16(a) reports furnished to us and written representations that no other reports were required during the fiscal year ended June 30, 2011, our officers, directors and greater than ten percent beneficial owners complied with all Section 16(a) filing requirements except as follows:  Lawrence D. Firestone was elected to the Board of Directors of Qualstar Corporation on May 13, 2011.  He filed an Initial Statement of Beneficial Ownership of Securities on Form 3 (which reported that he did not own any shares of Qualstar stock) on August 2, 2011, approximately three months after it was due.
  Code of Ethics
  Qualstar has adopted a written Code of Business Conduct and Ethics, which complies with the requirements for a code of ethics pursuant to Item 406(b) of Regulation S-K under the Securities Exchange Act of 1934, that applies to our chief executive officer, chief financial officer and persons performing similar functions. A copy of the Code of Business Conduct and Ethics has been filed as an exhibit to this report. A copy of the Code of Business Conduct and Ethics is also posted on our website at www.qualstar.com. A copy of the Code of Business Conduct and Ethics will be provided, without charge, to any shareholder who sends a written request to the Chief Financial Officer of Qualstar at 3990-B
Heritage Oak Court, Simi Valley, California 93063.
  Audit Committee
  Our Board of Directors has a standing Audit Committee, which is comprised solely of non-employee directors who satisfy current Nasdaq standards with respect to independence, financial expertise and experience.  The current members of the Audit Committee are Stanley W. Corker, Lawrence D. Firestone, Carl W. Gromada and Robert A. Meyer, with Mr. Gromada serving as Chairman.  Our Board of Directors has determined that Mr. Gromada, Mr. Firestone and Mr. Meyer meet the Securities and Exchange Commission’s definition of “audit committee financial expert.”
  ITEM 11.  EXECUTIVE COMPENSATION
  COMPENSATION DISCUSSION AND ANALYSIS
  This section contains a discussion of the material elements of compensation awarded to, earned by, or paid to our principal executive officer, our principal financial officer, and our other executive officers who were serving as executive officers of Qualstar at June 30, 2011.  These individuals are identified in the Summary Compensation Table and other compensation tables that follow this section, and are referred to throughout this report as our “named executive officers.”
  Executive Compensation Program Objectives
  Our executive compensation program is intended to fulfill three primary objectives:  first, to attract and retain qualified executives required for the success of our business; second, to reward these executives for financial and operating performance; and third, to align their interests with those of our stockholders to create long-term stockholder value.  The principal elements of the compensation program for our named executives include base salary, cash bonus, and long-term incentives in the form of stock options.
  4
  Executive Officer Compensation Elements
  Base Salaries
  Our Board of Directors, upon the recommendation of the Compensation Committee, establishes base salaries for our executive officers.  The Compensation Committee considers compensation paid by companies comparable in size to Qualstar, the experience level and past performance of the individual executives, as well as the revenues and profitability of Qualstar.  Our goal is to provide base salaries that are fair and competitive, but not excessive.
  The table below shows the base salary established for each of our named executive officers for fiscal years 2011 and 2012, and the percentage change compared to the prior fiscal year.  Salary adjustments typically do not coincide with the beginning of the fiscal year, so the amounts shown below may not be exactly the same as those shown in the Fiscal 2011 Summary Compensation Table.
 
 Name and Principal Position

Fiscal 2011

Base Salary

Percent Change versus Fiscal 2010

Base Salary

Fiscal 2012

Base Salary

Percent Change versus Fiscal 2011

Base SalaryWilliam J. Gervais

Chief Executive Officer and President

$177,507(1)

12.7%

$177,507

─Nidhi H. Andalon

Chief Financial Officer and Vice President

$150,000

─

$150,000

─Randy Johnson

Vice President and General Manager, N2Power

$180,000

─

$180,000

─Robert K. Covey

Vice President of Marketing

$165,600

─

$170,600(2)

3.0%
 __________
 (1)
As a cost-savings measure, Mr. Gervais voluntarily reduced his base salary by $20,000 in August 2008 and by an additional 10% in July 2009.  The $20,000 reduction in Mr. Gervais' base salary was reinstated in May 2011.
  (2)
As a cost-savings measure, Mr. Covey’s base salary was reduced by 10%, from $184,000 to $165,600, in July 2009.  Mr. Covey’s base salary was partially reinstated, by $5,000, in July 2011.
  Cash Bonuses
  Historically, each year the Board of Directors, upon the recommendation of the Compensation Committee, has established a cash bonus plan for executive officers based on Qualstar achieving stated levels of consolidated revenue and pre-tax profits for the fiscal year, excluding the effects of acquisitions, if any, made during the fiscal year.  However, in recent years Qualstar has not achieved the levels of revenues or pre-tax profits required to earn even the minimum bonus amounts under prior bonus plans.  Consequently, the Board of Directors did not establish a bonus plan for executive officers for fiscal 2011, and has not established a bonus plan for executive officers for
fiscal 2012, with the exception of Randy Johnson.  Mr. Johnson was first appointed an executive officer by our Board on March 25, 2010.  His incentive compensation plan, which was established before Mr. Johnson became an executive officer and has not been modified, provides that he can earn a cash bonus based on the level of pre-tax profits achieved by our N2Power business unit for the fiscal year.  Mr. Johnson’s potential bonus ranges from 0% of his base pay if N2Power is unprofitable, up to a maximum amount equal to 15% of his base pay if N2Power achieves pre-tax profits equal to more than 19% of N2Power sales.  For the fiscal year ended June 30, 2011, Mr. Johnson earned a bonus of $14,400, which is equal to 8% of his base pay.   Our Board of Directors reserves the right to pay discretionary cash bonuses, if deemed
appropriate.
  Equity-Based Compensation
  We use stock option grants as a form of long-term compensation.  For the past several years, however, our stock generally has not been actively traded and the price per share has declined or stayed within a relatively narrow range.  Consequently, stock options have not provided significant compensation in recent years.  We did not grant any stock options to our executive officers in fiscal 2011.
  5
 Our 2008 Stock Incentive Plan authorizes us to grant stock options to purchase, in the aggregate, up to 500,000 shares of our common stock.  This plan was adopted by our Board of Directors in November 2008 and approved by our shareholders in March 2009, and replaces our 1998 Stock Incentive Plan, which expired in 2008.  Under both plans, the exercise price of stock options must be no less than the closing price of our common stock on the date of grant.  It is our policy to grant stock options only at duly held meetings of our Board of Directors, with an exercise price equal to the closing price of our common stock on the date of the Board meeting.
  Compensation of our Named Executive Officers
  The amount of each component of compensation established for the named executive officers is based on a number of factors.  These factors include company performance, individual performance, compensation paid by companies comparable in size to Qualstar, the recommendations of our Chief Executive Officer, William J. Gervais, and a review of the prior compensation history of each executive officer.  Some of these factors are discussed above.  Other factors applicable to each named executive officer are discussed below.
  William J. Gervais co-founded Qualstar in 1984 and Mr. Gervais continues to serve Qualstar full time as an executive officer.  The Compensation Committee considers Mr. Gervais to be largely responsible for the success the Company has achieved, and to be one of our most important employees.  However, Mr. Gervais historically has requested that his base salary be maintained at levels the Compensation Committee considers to be relatively low.  The reasons for this include his belief that in the long term his individual equity ownership of Qualstar potentially will provide greater financial returns than current compensation.  As a cost-savings measure, Mr.
Gervais voluntarily reduced his base salary by $20,000 in August 2008 and by an additional 10% in July 2009.  In light of the Company’s improved financial performance during fiscal 2011, the $20,000 reduction in Mr. Gervais' base salary was reinstated in May 2011  Mr. Gervais also has never requested nor accepted stock option awards.
  Nidhi H. Andalon has been our Chief Financial Officer since January 2009 and was appointed Vice President by our Board of Directors on March 25, 2010. Ms. Andalon joined Qualstar’s finance department in January 2003 as a senior accountant, and was promoted to Assistant Controller in June 2004 and to Controller in October 2005.  In recognition of her performance as Chief Financial Officer during her first six months in that position, our Board approved an increase in her base salary to a rate of $150,000 per year, effective as of the start of fiscal 2010.  Ms. Andalon’s base salary in fiscal 2011 remained unchanged from the prior year.
  Randy Johnson has served as the General Manager of our N2Power business unit since 2002, and was appointed Vice-President and General Manager, N2Power by our Board of Directors on March 25, 2010.  Mr. Johnson has primary responsibility for all aspects of our power supply business, including sales.  Mr. Johnson’s base salary of $180,000 per year and his incentive compensation plan for fiscal 2011, as described above, remained unchanged from the prior year.
  Robert K. Covey has been our Vice President of Marketing since 1994.  As a cost-savings measure, Mr. Covey’s compensation was reduced by 10%, or $18,400, as of July 2009.  In light of the Company’s improved financial performance during fiscal 2011, $5,000 of the reduction in Mr. Covey’s base salary was reinstated in July 2011.
  Tax Considerations
  Under Section 162(m) of the Internal Revenue Code, we generally receive a federal income tax deduction for compensation paid to any of our named executive officers only to the extent total compensation does not exceed $1.0 million during any fiscal year or if it is “performance-based” under Section 162(m).  The total compensation earned by our executive officers has always been less than $1.0 million and, consequently, the limitations imposed by Section 162(m) have not been a factor.
  COMPENSATION COMMITTEE REPORT
  The Compensation Committee has reviewed the foregoing Compensation Discussion and Analysis and has discussed its contents with Qualstar’s management and the Board of Directors. Based on the review and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this report.
  Submitted by the members of the Compensation CommitteeStanley W. Corker (Chairman)Carl W. GromadaRobert A. Meyer
  6
 
 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
  Our Board of Directors has a standing Compensation Committee.  The members of this committee during the fiscal year ended June 30, 2011 and presently are Stanley W. Corker, Carl W. Gromada and Robert A. Meyer.  No executive officer of Qualstar serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors.  No member of the Compensation Committee is, or ever has been, an employee or officer of Qualstar.
  EXECUTIVE COMPENSATION
  Summary Compensation Table
  The following tables show information about the compensation earned by our principal executive officer, our principal financial officer, and our other executive officers who were serving as executive officers at June 30, 2011.  These officers are referred to in this report as the “named executive officers.”
  Fiscal Year 2011 Summary Compensation Table
  Name and Principal Position

Year

Salary (1)

($)


Bonus (1)

($)


Grant Date Fair Value of Option Awards (2)

($)


All Other Compensation (3)

($)


Total

($)William J. Gervais

2011

$
161,346


$
—


$
—


$
2,851


$
164,197Chief Executive Officer

2010


158,170



—



—



3,102



161,272and President

2009


178,838



—



—



2,254



181,092Nidhi H. Andalon (4)

2011


150,010



—



—



573



150,582Vice President

2010


150,010



—



—



919



150,929and Chief Financial Officer

2009


130,276



—



—



1,275



131,551Randy Johnson (5)

2011


180,003



14,400



—



573



194,976Vice President andGeneral Manager, N2Power

2010


180,003



3,600



—



573



184,176Robert K. Covey

2011


173,550



—



—



2,254



175,804Vice President of

2010


166,297



—



—



2,501



168,798Marketing

2009


183,467



—



—



5,123



188,590
 (1)
The amounts shown in these columns reflect salary and bonuses earned by the named executive officers for each of the fiscal years indicated.
  (2)
The amounts shown in this column represent the fair value of stock options at the date of grant.  No options were granted to any of our named executive officers during the last three fiscal years.  For information regarding the calculation of the grant date fair value of stock options, refer to note 9 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)
Ms. Andalon was appointed our Chief Financial Officer effective January 19, 2009 and Vice President effective March 25, 2010.
  (5)
Mr. Johnson was appointed our Vice-President and General Manager, N2Power effective March 25, 2010.
  7
  Grants of Plan-Based Awards
  The following table sets forth information regarding grants of awards to each named executive officer during the year ended June 30, 2011 under our equity incentive plan.
  Grants of Plan-Based Awards in Fiscal Year 2011
  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 Option Awards (2)

($)William J. Gervais

—


—


—


—Nidhi H. Andalon

—


—


—


—Randy Johnson

—


—


—


—Robert K. Covey

—


—


—


—
 
 (1)
No options were granted to any of our named executive officers during fiscal year 2011.  Stock options granted to the named executive officers typically 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, computed in accordance with FASB Accounting Standards Codification Topic 718, and does not necessarily correspond to the actual value that will be realized by the named executive officers.  For information regarding the calculation of the grant date fair value of stock options, refer to note 9 of the Qualstar financial statements included in Item 8 of this report.
 
 Outstanding Equity Awards
  The following table provides information regarding outstanding equity awards held by each named executive officer as of June 30, 2011, including the number of unexercised vested and unvested stock options. The vesting schedule for each grant is shown following this table.
  Outstanding Equity Awards at 2011 Fiscal Year End
  Option AwardsNumber of Securities

Underlying Unexercised

Options (#)


Option

Exercise

Price

($)


Option

Expiration

DateName

Exercisable


Unexercisable (1)William J. Gervais


—



—



—


—Nidhi H. Andalon


16,000



—


$
3.02


06/14/2016Randy Johnson


9,000



3,000


$
3.10


03/25/2018Robert K. Covey


20,000



—



5.94


01/03/2012
 _____________ (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.
 8
 
 Option Exercises
  The table below sets forth information for each named executive officer regarding the exercise of stock options during the fiscal year ended June 30, 2011, including the aggregate value realized upon exercise before payment of any applicable withholding taxes.
  Option Exercises in Fiscal Year 2011
 Option AwardsName

Number of Shares

Acquired on Exercise

(#)


Value Realized

on Exercise (1)

($)William J. Gervais

—


—Nidhi H. Andalon

—


—Randy Johnson

—


—Robert K. Covey

—


—
 (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.
  Director Compensation
  Each of our non-employee directors receives cash fees and equity-based awards as compensation for his service on the Board of Directors and the committees of the Board on which he is a member.  The table below sets forth cash compensation earned by each non-employee director, and the grant date fair value of share-based compensation granted to each non-employee director, during the fiscal year ended June 30, 2011.  Mr. Gervais did not receive any compensation for his service on the Board. All compensation earned by Mr. Gervais is reported in the Summary Compensation Table above and has been excluded from the table below.
  Fiscal Year 2011 Director Compensation Table
 Name

Fees Earned or Paid in Cash (1)

($)


Grant Date Fair Value of Option

Awards (2)(3)

($)


Total

($)Stanley W. Corker

$
18,000



—


$
18,000Lawrence D. Firestone (4)


1,865



—



1,865Carl W. Gromada


18,000



—



18,000Robert A. Meyer


18,000



—



18,000Richard A. Nelson (5)


2,250



—



2,250Robert E. Rich


11,250



—



11,250
 (1)
The amounts shown in this column represent the amount of cash compensation earned in fiscal year 2011 for service on the Board of Directors and any committees of the Board on which the director was a member in fiscal 2011.
  (2)
No stock options were granted to our directors during fiscal 2011.  Stock options granted to our directors typically vest over four years at the rate of 25% of the shares as of each anniversary of the date of grant.
  (3)
As of June 30, 2011, each of our non-employee directors named in the above table (except Mr. Richard A. Nelson and Mr. Lawrence D. Firestone) held unexercised stock options for 24,000 shares of our common stock.
  (4)
Mr. Firestone was appointed as a director and as a member of the Audit Committee on May 13, 2011.
  (5)
Mr. Nelson served as an officer and employee of Qualstar until his retirement on January 28, 2011.  Prior to his retirement, Mr. Nelson did not receive any fees for his service, as such, as a director of the Company.
  9
 
 Each of our non-employee directors receives $2,000 per quarter plus $1,000 for each Board meeting attended as compensation for his service on the Board, and is reimbursed for expenses incurred in connection with attendance at meetings of the Board and any committees on which he serves. Directors who serve on the Audit Committee of our Board receive an additional fee of $1,000 per quarter plus an attendance fee of $500 per meeting if the Audit Committee meeting is held in conjunction with a meeting of the full Board, and $1,000 per meeting if held on a day when the full Board does not meet. Directors who serve on the Compensation Committee of our Board receive an additional fee of $500 for
attending meetings of that committee that are held on a day when the full Board does not meet. An attendance fee of $250 per meeting is paid for telephonic meetings of the full Board or of a committee on which a director is a member. No fees are paid for service on the Board to directors who are employees of Qualstar.
  Directors are eligible to receive stock options under our 2008 Stock Incentive Plan.  However, no stock options were granted to our non-employee directors during the fiscal year ended June 30, 2011.
  Potential Benefits Upon or Following a Change in Control
  Stock options granted under our 2008 Stock Incentive Plan and our 1998 Stock Incentive Plan provide that upon certain circumstances in the event of or following a change in control of Qualstar, the unvested portion of such stock options will accelerate and become immediately vested in full.  In general, a change in control is deemed to occur if we were to sell substantially all of our assets or if Qualstar were to merge into, consolidate with or enter into a reorganization with another entity in a transaction in which Qualstar is not the surviving corporation.
  If a change in control occurs and the acquiring entity does not assume and continue the employee’s rights under the unvested stock options, then all unvested stock options will accelerate and vest in full upon the occurrence of the change in control.  If the acquiring entity does assume the employee’s rights under the unvested stock options, but the employee’s employment subsequently is terminated without cause, or if the employee resigns for good reason after the change in control, then all unvested stock options held by the employee would accelerate and vest in full as of the date of termination.
  The reasons for which an employee may voluntarily resign and trigger acceleration of vesting include a change in the employee’s position which materially reduces his or her duties and responsibilities or the level of management to which the employee reports, a reduction in the employee’s level of compensation and benefits by more than 15 percent, or a relocation of employee’s principal place of employment by more than 30 miles without his or her consent.
  The table below sets forth information regarding the estimated amounts that each named executive officer would have realized in the event that a change in control of Qualstar had occurred and all of his unvested stock options had accelerated and become immediately vested in full as of June 30, 2011.
  Estimated Benefits at 2011 Fiscal Year End in the Event of a Change in Control
 Name

Option Awards (1)William J. Gervais

—Nidhi H. Andalon

—Randy Johnson

—Robert K. Covey

—
  (1)
The amounts in this column represent the aggregate gain each named executive officer would have realized if all unvested stock options that were held by him or her on June 30, 2011 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 $1.81 per share.  10
  ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  The following table sets forth information with respect to the beneficial ownership of our common stock as of October 21, 2011 for:
  ●
each person (or group of affiliated persons) who we know beneficially owns more than 5% of our common stock;
  ●
each of our directors;
  ●
each of the named executive officers; and
  ●
all of our directors and executive officers as a group.
  Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting and investment power with respect to shares.  Except as indicated by footnote, the persons named in the table have sole voting and sole investment control with respect to all shares beneficially owned, subject to community property laws where applicable.  The percentage of shares beneficially owned is based on 12,253,117 shares of common stock outstanding as of October 20, 2011.  Shares of common stock subject to options currently exercisable or exercisable within 60 days of October 21, 2011, are deemed outstanding for computing the percentage
of the person holding such options, but are not deemed outstanding for computing the percentage of any other person.  The address for those individuals for which an address is not otherwise indicated is: c/o Qualstar Corporation, 3990-B Heritage Oak Court, Simi Valley, California 93063.
  Common


Options

Exercisable


Beneficial OwnershipName

Shares Owned


Within 60 Days (1)


Number


PercentBKF Capital Group, Inc.

Steven N. Bronson (2)

225 N.E. Mizner Blvd., Suite 400

Boca Raton, FL 33432


1,720,744



—



1,720,744



14.0
%Dimensional Fund Advisors, LP (3)

6300 Bee Cave Road, Austin, TX 78746


937,628



—



937,628



7.7
%Porter Orlin LLC (4)

665 Fifth Avenue, Floor 34, New York, NY 10103


917,901



—



917,901



7.5
%Stanley W. Corker


18,940



24,000



42,940



*Carl Gromada


8,171



24,000



32,171



*Lawrence D. Firestone


—



—



—



*Robert A. Meyer


—



24,000



24,000



*Robert E. Rich


131,400



24,000



155,400



1.3
%William J. Gervais


3,238,364



—



3,238,364



26.4
%Nidhi H. Andalon


—



16,000



16,000



*Randy Johnson


—



9,000



9,000



*Richard A. Nelson


247,992



—



247,992



2.0
%Robert K. Covey


48,280



20,000



68,280



*All directors and officers as a group (10 persons)


3,693,147



141,000



3,834,147



30.9
%
 _____________
 *Less than 1.0%
  (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 21, 2011.
  (2)
Based on information contained in reports filed with the Securities and Exchange Commission, BKF Capital Group, Inc. beneficially owns 1,663,044  shares of Qualstar common stock as of October 10, 2011.  Steven N. Bronson, as the Chairman and President of BKF Captial Group, Inc., may be deemed to beneficially own the shares of Qualstar held by BKF Capital Group, Inc.  Mr. Bronson, as the sole owner of BA Value Investors, LLC, is the beneficial owner of 57,700 shares of Qualstar.
  (3)
Based on information contained in reports filed with the Securities and Exchange Commission, Dimensional Fund Advisors, LP, an investment adviser, beneficially owns 937,628 shares as of June 30, 2011.
  (4)
Based on information contained in reports filed with the Securities and Exchange Commission, Porter Orlin LLC, an investment adviser, beneficially owns 917,901 shares as of June 30, 2011.
  11
 
 Additional Equity Compensation Plan Information
  Information regarding Qualstar’s equity compensation plans as of June 30, 2011 is included in Item 5 of this report and is incorporated herein by reference.
  ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  Transactions with Related Persons
  There are no relationships or transactions involving any of our directors or executive officers for which disclosure is required under the rules of the Securities and Exchange Commission.
  In accordance with the charter of the Audit Committee of our Board of Directors, the Audit Committee is responsible for reviewing any proposed transaction with any related person which involves a potential conflict of interest or for which approval is required under applicable Securities and Exchange Commission and Nasdaq rules.  Currently, this review and approval requirement applies to any transaction to which Qualstar will be a party, in which the amount involved exceeds $120,000, and in which any of the following persons will have a direct or indirect material interest: (a) any of our directors or executive officers, (b) any nominee for election as a director, (c) any security holder
who is known to us to own of record or beneficially more than five percent of our common stock, or (d) any member of the immediate family of any of the persons described in the foregoing clauses (a) through (c).
  In the event that management becomes aware of any related person transaction, management will present information regarding the proposed transaction to the Audit Committee for review.  Approval of a transaction with a related person requires the affirmative vote of a majority of the members of the Audit Committee or of a majority of the members of the full Board of Directors.  If the related person transaction involves a member or members of the Board, approval requires a majority vote of the directors who do not have a financial interest in the transaction.
  Director Independence
  Our Board has determined that all of our directors satisfy the current “independent director” standards established by rules of The Nasdaq Stock Market, Inc. (“Nasdaq”), except for William J. Gervais, who is Chief Executive Officer and President of Qualstar, and Richard A. Nelson, who was Vice President Engineering and Secretary of Qualstar until January 28, 2011, when he retired.  Each director serving on the Audit Committee of our Board also meets the more stringent independence requirements established by Securities and Exchange Commission rules applicable to audit committees.  Mr. Robert E. Rich, a member of our Board of Directors since January 2000,
is a shareholder in the law firm of Stradling Yocca Carlson & Rauth, which has provided legal services to Qualstar since 1984.  Our Board has determined that no director has a relationship that would interfere with the exercise of independent judgment in carrying out his responsibilities as a director.  There are no family relationships among any of the directors or executive officers of the Company.
  ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Fees Paid to Independent Registered Public Accountants
  The aggregate fees billed by SingerLewak LLP, our independent registered public accounting firm for fiscal years 2011 and 2010 for professional services rendered to Qualstar during the fiscal years ended June 30, 2011 and June 30, 2010, respectively, were comprised of the following:
  Fiscal

2011


Fiscal

2010Audit Fees

$
125,000


$
130,237Audit-related fees


—



—Tax fees


6,200



5,000All other fees


—



—Total fees

$
131,200


$
135,237
  12
  Audit fees include fees for professional services rendered in connection with the audit of our consolidated financial statements for each year and reviews of our unaudited consolidated quarterly financial statements, as well as fees related to consents and reports in connection with regulatory filings for those fiscal years.
  SingerLewak LLP was our principal accountant for tax compliance review, tax advice and tax planning during fiscal years 2011 and 2010.  Tax fees related primarily to tax compliance review and advisory services.
  Audit Committee Pre-Approval Policies and Procedures
  Our Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent registered public accountants in accordance with applicable Securities and Exchange Commission rules. The Audit Committee adopted a written pre-approval policy on June 25, 2003, and all services performed by SingerLewak LLP have been pre-approved in accordance with the Audit Committee’s pre-approval policy. The Audit Committee generally pre-approves particular services or categories of services on a case-by-case basis. The independent registered public accountants and management periodically report to the Audit Committee regarding the extent of services provided by
the independent registered public accountants in accordance with these pre-approvals, and the fees for the services performed to date.
  13
  SIGNATURES
 
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
   QUALSTAR CORPORATIONDate: October 28, 2011
By:
/s/ WILLIAM J. GERVAISWilliam J. Gervais,

Chief Executive Officer and President
   Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
 Signature

Title

Date/s/  WILLIAM J. GERVAIS

Chief Executive Officer,

October 28, 2011William J. Gervais

President and Director(principal executive officer)/s/  NIDHI H. ANDALON

Chief Financial Officer, Vice President and Secretary

October 28, 2011Nidhi H. Andalon

(principal financial officer)/s/  RICHARD A. NELSON

Director

October 28, 2011Richard A. Nelson/s/  LAWRENCE D. FIRESTONE

Director

October 28, 2011Lawrence D. Firestone/s/  CARL W. GROMADA

Director

October 28, 2011Carl W. Gromada/s/  STANLEY W. CORKER

Director

October 28, 2011Stanley W. Corker/s/  ROBERT E. RICH

Director

October 28, 2011Robert E. Rich/s/  ROBERT A. MEYER

Director

October 28, 2011Robert A. Meyer
  14
 
 EXHIBIT INDEX
 
 Exhibit

No.

Description3.1(1)

Restated Articles of Incorporation.3.2(4)

Bylaws, as amended and restated as of March 24, 2011.10.1(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, 2000.10.4(6)

Amendment to Lease agreement between Strategic Performance Fund-II, Inc. and Qualstar Corporation, dated June 30, 2009.10.5(5)*

2008 Stock Incentive Plan14.1(3)

Code of Business Conduct and Ethics23.1

Consent of Independent Registered Public Accounting Firm (SingerLewak LLP).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.(4)
Incorporated by reference to Exhibit 3.1 to Qualstar’s Report on Form 8-K dated March 24, 2011.(5)
Incorporated by reference to Exhibit 10.1 to Qualstar’s Report on Form 10-Q/A for the fiscal quarter ended March 31, 2009.(6)
Incorporated by reference to Exhibit 10.4 to Qualstar’s report on Form 10-K for the fiscal year ended June 30, 2009.*
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.