<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
(Mark One)

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

For the quarterly period ended          June 30, 1999
                              -------------------------------------------------

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the Transition period from _____________________ to _______________________

Commission file number     0-28484
                       --------------------------------------------------------

                              QualMark Corporation
-------------------------------------------------------------------------------
                     (Exact name of small business issuer as
                            specified in its charter)

                  Colorado                                 84-1232688
-----------------------------------------            --------------------------
       (State or other jurisdiction of                   (I.R.S. Employer
        incorporation or organization)                   Identification No.)

     1329 West 121st Avenue, Denver, CO                           80234
-------------------------------------------------------------------------------
  (Address of principal executive offices)                      (Zip Code)

(Issuer's telephone number)             (303) 254-8800
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
             (Former name, former address and former fiscal year,
                       if changed since last report)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
                                                                [X] Yes  [ ] No

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

     Check whether the registrant file all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.                   [ ] Yes  [ ] No

                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of latest practicable date:

The number of shares of no par value common stock at August 13, 1999
is 3,539,015.
---------------------------------------------------------------------

Transitional Small Business Disclosure Format (check one):      [ ] Yes  [X] No

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
                              QUALMARK CORPORATION
                                 BALANCE SHEET
                      (AMOUNTS IN THOUSANDS, EXCEPT SHARES)
<TABLE>
<CAPTION>
                                                       JUNE 30, 1999
                                                        (UNAUDITED)      DEC. 31, 1998
                                                       -------------------------------
<S>                                                    <C>               <C>
                    ASSETS
Cash                                                        $164             $668
Trade accounts receivable, net of allowance for
    doubtful accounts of $164 at June 30, 1999
    and December 31, 1998                                  4,243            3,916
Inventories                                                1,344            1,363
Deferred income taxes                                      1,443              861
Other current assets                                         176              132
                                                          ------           ------
    Total current assets                                   7,370            6,940

Property and equipment, net                                1,448            1,315
Long-term notes receivable                                   104              104
Other assets                                                 152              141
                                                          ------           ------

Total assets                                              $9,074           $8,500
                                                          ======           ======

     LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable                                          $1,007             $869
Accrued expenses                                           1,947            1,411
Customer deposits and deferred revenue                        70               63
Current portion of long term obligations                   1,050              441
                                                          ------           ------
    Total current liabilities                              4,074            2,784

Noncurrent portion of long term obligations                  961              975

Shareholders' Equity:
Common Stock; no par value;15,000,000
    shares authorized; 3,539,015 and 3,485,015
    shares issued and outstanding at June 30, 1999
    and December 31, 1998, respectively                    6,523            6,396
Accumulated deficit                                       (2,484)          (1,655)
                                                          ------           ------
    Total shareholders' equity                             4,039            4,741
                                                          ------           ------

Total liabilities and shareholders' equity                $9,074           $8,500
                                                          ======           ======
</TABLE>


    The accompanying notes are an integral part of the financial statements.
<PAGE>

                              QUALMARK CORPORATION
                             STATEMENT OF OPERATIONS
            (UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                              FOR THE THREE    FOR THE THREE      FOR THE SIX       FOR THE SIX
                                                               MONTHS ENDED     MONTHS ENDED     MONTHS ENDED      MONTHS ENDED
                                                              JUNE 30, 1999    JUNE 30, 1998    JUNE 30, 1999     JUNE 30, 1998
                                                           ---------------------------------------------------------------------
<S>                                                        <C>                 <C>              <C>               <C>
Net revenue                                                          $3,400           $3,429           $6,381            $6,580
Cost of sales                                                         2,132            1,869            3,935             3,665
                                                           ---------------------------------------------------------------------
    Gross profit                                                      1,268            1,560            2,446             2,915

Selling, general and administrative expenses                          2,193            1,079            3,428             2,221
Research and development expenses                                       185              195              355               382
                                                           ---------------------------------------------------------------------
    Income(loss) from operations                                     (1,110)             286           (1,337)              312

Other income (expense):
    Interest                                                            (40)             (13)             (69)              (14)
    Other                                                                                                                    12
                                                           ---------------------------------------------------------------------
Net income(loss) before income taxes                                 (1,150)             273           (1,406)              310

Provision (benefit) for income taxes                                   (472)              18             (577)               18
                                                           ---------------------------------------------------------------------

Net income (loss)                                                     ($678)            $255            ($829)             $292
                                                           =====================================================================


Basic earnings(loss) per share                                       ($0.19)           $0.07           ($0.24)            $0.09
Diluted earnings(loss) per share                                      (0.19)            0.07            (0.24)             0.08

Weighted average number of common shares - basic                      3,539            3,435            3,525             3,415
Weighted average number of common shares - diluted                    3,539            3,868            3,525             3,831
</TABLE>


    The accompanying notes are an integral part of the financial statements.

<PAGE>

                              QUALMARK CORPORATION
                             STATEMENT OF CASH FLOWS
                        (UNAUDITED, AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                       FOR THE SIX                  FOR THE SIX
                                                                                      MONTHS ENDED                 MONTHS ENDED
                                                                                     JUNE 30, 1999                JUNE 30, 1998
                                                                                 ------------------            -----------------
<S>                                                                              <C>                           <C>
Cash Flows From Operating Activities:
Net income(loss)                                                                             ($829)                        $292
Adjustments to reconcile net income(loss) to net cash from
  operating activities:
    Depreciation and amortization                                                              277                          279
    Warrant and stock option expense                                                            11
    Change in deferred income taxes                                                           (582)
Change in assets and liabilities:
    Accounts receivable                                                                       (327)                        (851)
    Inventories                                                                                 19                         (173)
    Notes receivable                                                                                                        (79)
    Other assets                                                                               (29)                         (29)
    Accounts payable and accrued expenses                                                      674                           53
    Customer deposits and deferred revenue                                                       7                           25
                                                                                 ------------------            -----------------
        Net cash used in operation activities                                                 (779)                        (483)
                                                                                 ------------------            -----------------


Cash Flows From Investing Activities:
Acquisition of property and equipment                                                         (410)                        (396)
Investment in patents                                                                          (26)
                                                                                 ------------------            -----------------
    Net cash used in investment activities                                                    (436)                        (396)
                                                                                 ------------------            -----------------


Cash Flow From Financing Activities:
Proceeds from borrowing                                                                        750                          775
Proceeds from issuance of common stock                                                         116                          113
Payments on long term obligations                                                             (155)                         (41)
                                                                                 ------------------            -----------------
    Net cash provided by financing activities                                                  711                          847
                                                                                 ------------------            -----------------

Net decrease in cash                                                                          (504)                         (32)
Cash at beginning of period                                                                    668                          459
                                                                                 ------------------            -----------------
Cash at end of period                                                                         $164                         $427
                                                                                 ==================            =================

NONCASH FINANCING ACTIVITIES
SUPPLEMENTAL DISCLOSURE
    Interest paid                                                                              $69                          $15
    Taxes paid                                                                                  $1
</TABLE>


    The accompanying notes are an integral part of the financial statements.

<PAGE>

                              QUALMARK CORPORATION
                          NOTES TO FINANCIAL STATEMENTS


QualMark Corporation (the "Company") was founded in 1991 and is a manufacturer
of physical stress systems. These systems rapidly and efficiently expose product
design and manufacturing related failures on its customer's products, thereby
providing manufacturers the necessary information to improve product quality.
The Company also operates a network of test centers that its customers may use
as an alternative, or in addition, to purchasing its systems.


NOTE 1 - Financial Presentation

These financial statements should be read in conjunction with the audited
financial statements for the year ended December 31, 1998 and notes thereto.

The interim financial data as of June 30, 1999 and for the three and six months
ended June 30, 1999 and 1998 is unaudited; however, in the opinion of management
of the Company, the interim data includes all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the results
for the interim periods presented. Results for the three and six months ended
June 30, 1999 are not necessarily indicative of results for the remainder of
1999.



NOTE 2 - Inventories

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                        6/30/99
                                                       (unaudited)               12/31/98
                                                      -----------------------------------
       <S>                                           <C>                        <C>
         Raw materials                                    $793                       $708
         Work in process                                   440                        198
         Finished goods                                    111                        457
                                                      --------                   --------
                                                        $1,344                     $1,363
                                                      ========                   ========
</TABLE>

NOTE 3 - Earnings(Loss) Per Share

Basic earnings per share is computed by dividing net income available to common
shareholders by the weighted average number


                                       5
<PAGE>

of shares outstanding during the period. Diluted earnings per share are
computed using the weighted average number of shares determined for the basic
computations plus the number of shares of common stock that would be issued
assuming all contingently issuable shares having a dilutive effect on
earnings per share were outstanding for the period.

Due to the Company's loss from continuing operations for the three and six
months ended June 30, 1999, a calculation of earnings per share assuming
dilution is not required. Options and warrants to purchase 920,483 shares were
not included in the computation of earnings per share for the three and six
month periods assuming dilution at June 30, 1999 because including the options
would result in an antidilutive effect on earnings per share. Options and
warrants to purchase 841,983 shares are included in the computation of earnings
per share for the three and six month periods ended June 30, 1998, assuming
dilution as the options and warrants would have a dilutive effect on earnings.


NOTE 4 - Litigation

On March 22, 1996, the Company was served with a summons and complaint in the
U.S. District Court in the Central District of California from Screening
Systems, Inc. ("SSI"), a competitor. The complaint, as amended, alleges that the
Company's vibration system infringes three patents owned by Hughes Electronics
("Hughes") and licensed to SSI, and seeks injunctive relief, monetary damages
and costs of litigation. Because Hughes would not voluntarily join the action as
a plaintiff, SSI has named Hughes as a defendant in the action.

The Company has been aware of the patents in question since the Company
commenced its operations and, with advice from patent counsel, designed its
vibration system, components of which are also patented, so as to not infringe
the patents. The Company's vibration system has been used continuously in its
products since 1991. On two prior occasions, Hughes put the Company on notice
that the Company's vibration system might infringe its patents, although no
litigation was commenced. On both occasions, the Company concluded, after
consultation with patent counsel, that infringement did not exist and has seen
nothing since to change that conclusion.

In response to that action, the Company consulted with its


                                       6
<PAGE>

current legal and patent counsel, who agreed with prior patent counsels'
opinion that the Company's vibration system does not infringe the SSI
patents. Both sides have filed motions with the Court to limit issues for
trial, or perhaps obviate the need for trial.

SSI filed a second action against QualMark in March 1998 asserting one claim for
a declaratory judgment and several additional claims in the nature of false
advertising and unfair competition. The case had been stayed until March 1999
when the Court consolidated it with the patent infringement case and set it for
trial on August 31, 1999. The Court has subsequently delayed the start of the
trial until October 5, 1999.

Management intends to vigorously defend both actions. However, no assurances can
be given that the Company will be successful in its defense. The Company
believes that the suit may have a material adverse effect on the results of
operations and financial condition of the Company in terms of legal fees and
costs for defending the claim, the possibility of an unfavorable outcome and an
award of damages, and the loss of management time needed to deal with the suit.
At December 31, 1997, the Company accrued an estimate provided by its legal
counsel as to costs related to cover the legal fees associated with defending
the suit. No additional accrual was warranted for 1998. However, an estimate
received by the its legal counsel in June 1999 as to costs to cover legal fees
associated with defending the suit through the trial now set for October 5, 1999
caused the Company to set up a legal reserve of an additional $1,000,000 for the
quarter ended June 30, 1999.

The Company believes that the legal action by the plaintiff is without merit and
will continue to vigorously defend itself in these matters.


NOTE 5 - Segment Information

The Company operates two business segments, equipment and Accelerated
Reliability Test Centers ("ARTC"). The equipment segment ("Equipment") is
engaged in the manufacture and sale of vibration and thermal chambers for
quality control testing for various electronic devices. The ARTC segment
operates service centers where vibration and thermal chambers are available to
customers for daily rental.

The accounting policies for these segments are the same as those


                                       7
<PAGE>

described in Note 1 of the Company's Form 10-KSB for 1998 and there are no
intersegment transactions. The Company evaluates the performances of its
segments and allocates resources to them based primarily on gross profit. All
operating revenues and expenses are allocated to business segments in
determining their gross profit. All other expenses are not utilized in
determining the allocation of resources on a segment basis.

The table below summarizes information about the reported segments (in
thousands) as of and for the three months ended June 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                  EQUIPMENT                  ARTC                 TOTAL
THREE MONTHS ENDED 6/30/99
<S>                                                               <C>                      <C>                   <C>
Sales                                                                $2,319                $1,081                $3,400
Gross profit                                                            742                   526                 1,268
Property and equipment, net                                             544                   904                 1,448


THREE MONTHS ENDED 6/30/98

Sales                                                                $2,504                  $925                $3,429
Gross profit                                                          1,137                   423                 1,560
Property and equipment, net                                             439                 1,113                 1,552
</TABLE>


The table below summarizes information about the reported segments (in
thousands) as of and for the six months ended June 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                  EQUIPMENT                  ARTC                 TOTAL
SIX MONTHS ENDED 6/30/99
<S>                                                               <C>                      <C>                   <C>
Sales                                                                $4,477                $1,904                $6,381
Gross profit                                                          1,629                   817                 2,446
Property and equipment, net                                             544                   904                 1,448


SIX MONTHS ENDED 6/30/98

Sales                                                                $4,697                $1,883                $6,580
Gross profit                                                          2,070                   845                 2,915
Property and equipment, net                                             439                 1,113                 1,552
</TABLE>


                                       8

<PAGE>

The following is sales by geographic area (in thousands) for the three months
ended June 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED    THREE MONTHS ENDED
                                              JUNE 30, 1999        JUNE 30, 1998
     <S>                                   <C>                   <C>
     United States                                $2,790               $3,092
     International                                   610                  337
                                           ----------------------------------------

     Total                                        $3,400               $3,429
                                           ----------------------------------------
</TABLE>


The following is sales by geographic area (in thousands) for the six months
ended June 30, 1999 and 1998:

<TABLE>
<CAPTION>

                                            SIX MONTHS ENDED         SIX MONTHS ENDED
                                              JUNE 30, 1999           JUNE 30, 1998
     <S>                                    <C>                      <C>
     United States                                $5,505               $6,240
     International                                   876                  340
                                           ------------------------------------------

     Total                                        $6,381               $6,580
                                           ------------------------------------------
</TABLE>


Item 2.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Forward-Looking Statements

The statements contained in this report which are not historical in nature are
forward-looking statements that are subject to risks and uncertainties that are
difficult or impossible to predict with accuracy. Actual results could differ
materially from those set forth or implied by forward-looking statements. Such
risks and uncertainties include, but are not limited to, the risk of an
unfavorable outcome in the SSI litigation, variability in order flow and
operating results, the ability of the Company to find and retain qualified
personnel to staff its manufacturing and marketing operations and existing and
anticipated test centers, and the risk that the demand for the Company's systems
will not continue to grow or that the Company's system or products, or those of
third parties on which the Company relies, will not be year 2000 compliant.


                                       9

<PAGE>

Results of Operations

The Company's annual and quarterly operating results could be subject to
fluctuations for a variety of reasons. The Company operates with a small backlog
relative to its revenue; thus most of its sales in each quarter result from
orders received in the current or prior quarter. In addition, because prices for
the Company's products are relatively substantial, a significant portion of net
sales for each quarter is attributable to a relatively small number of units.
The Company expects to continue to experience such fluctuations in its results
of operations in the future.

Revenue

Net revenue decreased, due to soft OVS system demand, $29,000 or .8% for the
three months ended June 30, 1999, as compared with the three months ended June
30, 1998, from $3,429,000 to $3,400,000. Net revenue also decreased in the
six-month period ended June 30, 1999 as compared with the six months ended June
30, 1998, by $199,000 (3.0%), from $6,580,000 to $6,381,000.

System sales decreased, due to the decreased demand being felt from the weak
Asian economy and a general softening in the manufacturing sector, $185,000
(7.4%) in the three-month period ended June 30, 1999, from $2,504,000 to
$2,319,000 as compared to the three month period ended June 30, 1998. For the
six-month period ended June 30, 1999 system revenue decreased $220,000 (4.7%)
over the same six-month period in 1998, from $4,697,000 to $4,477,000. Unit
shipments remained unchanged at sixteen systems in the comparable three-month
periods ended June 30, 1999 and 1998 and from thirty four to thirty one systems
in the comparable six-month periods ended June 30, 1998 and 1999.

Test center revenue for the three months ended June 30, 1999 increased $156,000
(16.9%) from $925,000 to $1,081,000 over the three months ended June 30, 1998.
For the six months ended June 30, 1999, test center revenue increased $21,000
(1.1%) from $1,883,000 to $1,904,000 over the same period in 1998. The Company
operated eight test centers and had three strategic partnership test center
operations in Europe during 1999 versus eight test centers in the U.S. and one
strategic partnership operation in Europe during the same period in 1998.


                                      10

<PAGE>

Gross Margin

The gross margin for the three months ended June 30, 1999 was 37.3%. This
compares to a gross margin of 45.5% for the three months ended June 30, 1998.
For the six months ended June 30, 1999, the gross margin was 38.3% compared to a
gross margin of 44.3% in the same six-month period in 1998. The decrease in the
gross margin for the three and six month periods is mostly due to decreased
capacity utilization in the OVS manufacturing segment. The Company also
experienced additional costs associated with the introduction of its new
operating and vibration systems during the three months ended June 30, 1999. The
costs for the new product introduction are not expected to recur.

Operating Expense

General and administrative expenses increased from $527,000 to $1,569,000 for
the three months ended June 30, 1999 compared to the same three-month period in
1998. For the six months ended June 30, 1999, general and administrative costs
increased from $1,037,000 to 2,120,000. The increase in general and
administrative expense in the three and six month periods is due to the
establishment of an additional $1,000,000 litigation reserve in the three months
ended June 30, 1999. The Company believes that this reserve will be sufficient
to meet litigation expenses for the remainder of the suit filed by SSI.

Sales and marketing expenses increased $72,000 from $552,000 for the three
months ended June 30, 1998 to $624,000 for the three months ended June 30, 1999.
For the six months ended June 30, 1999, sales and marketing expense increased
$124,000 over the same period in 1998, from $1,184,000 to $1,308,000. This
increase is primarily due to increases in department headcount and associated
expenses over the same three and six month periods in 1998.

Research and development costs decreased from $195,000 for the three months
ended June 30, 1998 to $185,000 for the three months ended June 30, 1999. For
the six month period ended June 30, 1999, research and development cost
decreased $27,000 from $382,000 for the six months ended June 30, 1998 to
$355,000 in the current period. The decrease in cost reflects the completion of
the vibration system project and the market introduction of that product earlier
this year. The development of the vibration system was a material-intensive
program and current development efforts have, to date, not required the same
amount of material expense as the projects in the prior period. The Company
expects


                                      11

<PAGE>

research and development costs to continue at or above such levels throughout
1999.

For the three months ended June 30, 1999, interest expense was $40,000. For the
six months ended June 30, 1999, interest expense was $69,000. This compares with
interest expense in the prior year's three-month period ending June 30, 1998 of
$13,000 and interest expense of $14,000 for the six months ended June 30, 1998.
The increase in interest expense is due to increased borrowing over the prior
periods in 1998.


Liquidity and Capital Resources

During the first six months of 1999, the Company's operations used $779,000 of
cash in operating activities, invested $410,000 for equipment and invested
$26,000 for patents. The Company paid $150,000 on long term obligations and
borrowed $750,000 under its credit line agreement with its bank. An investor
exercised warrants for a net increase in common stock of $116,000. Together,
these activities resulted in a cash decrease of approximately $504,000 to a
quarter ending balance of $164,000.

The Company expects to meet long term liquidity requirements through cash flows
generated by operations, existing cash balances and by utilizing its $5,000,000
credit line with its bank. The Company is dependent, however, on its ability to
maintain and grow its systems and test center businesses in order to generate
adequate operating cash flows but can make no assurances that it will be
successful in doing so.


YEAR 2000 ISSUE

During the year ended December 31, 1998, management initiated a program to
prepare the Company's financial, manufacturing, service and other critical
systems and applications for the Year 2000. The program involves the Company's
upper management as well as project leaders from each department. The focus of
the program is to identify affected software and hardware, develop a plan to
correct that software or hardware in the most effective manner and implement and
monitor that plan. The program will also include communications with the
Company's significant suppliers and customers to determine the extent to which
the Company is vulnerable to any of their Year 2000 issues. Although the
Company's Year 2000 program is in various stages of


                                      12

<PAGE>

completion in each department, the Company anticipates it will have all
modifications and replacements in place by September 30, 1999.

   OVS Systems

The Company's Omni-axial Vibration ("OVS") products include embedded controllers
that have been tested and have been determined to be Year 2000 compliant. The
Company expects that there will be no Year 2000 issues in regards to its
products.

The Company's proprietary OVS operating system software that controls all of the
products in the OVS product line has been upgraded this year as part of an
overall product improvement program. Part of that program ensured that the
software control system be made Year 2000 compliant. Management believes that
this has been achieved. There were no material added costs for this compliance.
Previous versions of the control system have been investigated for compliance
issues. The findings do not indicate compliance problems for operating system
version 5.0 and later. Upgrade packages for versions prior to 5.0 are now
available.

   Internal Hardware and Software

Each department is currently reviewing all of the software and hardware that
could affect its operations. With the exception of the OVS operating system
software, all software products in use were purchased from Microsoft or other
major software publishing companies. Anticipated costs for Year 2000 compliance
for these software package upgrades are considered to be part of the Company's
normal ongoing business plan and are not expected to add materially to the plan.
Management has included approximately $23,000 for software upgrades in its 1999
plan and believes that amount to be adequate to achieve compliance.

A vast majority of the employees of the Company utilize personal computers in
their work. One of the risks identified is that these personal computers may not
function or function properly due to the internal embedded controllers not being
Year 2000 compliant. The same problem may exist in the Company's local network
server, wide-area network server equipment and the Company's internal telephone
system. Management believes the potential for problems primarily involves older
equipment. Most of the personal computers and network server equipment have been
purchased within the last two years and are believed to be at lower risk than
the smaller population of older computer


                                      13

<PAGE>

equipment in use around the Company. The internal telephone system was
purchased from and is supported by a leading manufacturer of that type of
equipment. Software to diagnose Year 2000 compliance for the personal
computers and network servers has been identified and procurement is
underway. The cost for this software is less than $1,000. It is unknown at
this time how much of this equipment is subject to the Year 2000 problem,
however a worst case scenario assumes the cost of replacing non-compliant
equipment to be $105,000. The most likely scenario of replacing affected
computer and telephone equipment has not been determined at this time.
However, management has included approximately $60,000 in computer and
telephone system upgrades into its 1999 operating plan.

The Company expects to incur internal staff costs as well as consulting fees and
other expenses related to the Year 2000 project. The Company has already
purchased and installed new accounting and manufacturing control software that
is Year 2000 compliant. The cost to do this was less than $10,000. This upgrade
was done in response to the Year 2000 issue, however this and many other
upgrades are part of the Company's normal business plan.

   External Factors

The Company uses an outside service provider for all of its human resource
administration functions. This includes payroll and employee benefits
management. The service provider has represented to the Company that it is Year
2000 compliant in regard to the services it provides the Company.

An area that has been identified as bringing potential problems in Year 2000
compliance involves key suppliers of inventory materials. The Company utilizes
three key vendors as suppliers in the manufacture of its OVS systems. The
Company cannot guarantee that the systems of these suppliers, or other companies
on which the Company relies, will be Year 2000 compliant. Other than those three
vendors, the Company's inventory suppliers are commodity or off-the-shelf parts
distributors that can be replaced with little or no notice. It is believed that
the three critical key-component suppliers could be replaced in the event that
one or all were determined to be subject to critical shipment delays due to Year
2000 issues. Due to the lead times associated with bringing new suppliers
on-line, early determination of vendor Year 2000 compliance is necessary. It is
believed that the Company's vendors are Year 2000 compliant. Those identified as
key vendors have certified that they are Year


                                      14

<PAGE>

2000 compliant. Every attempt will be made to ensure that a continuous supply
of the key components is maintained.


                            PART II OTHER INFORMATION


Item 1   Legal Proceedings

     See Note 4 to Financial Statements.

Item 4   Submission of Matters to a Vote of Security Holders

     The following matters were submitted to a vote of shareholders of the
Company at the Annual Meeting of Shareholders held April 23, 1999:

         (a)  The following members were elected to the Board of Directors to
              hold office until the next annual meeting.

<TABLE>
<CAPTION>
         Nominee                            For                        Withheld
         -----------------                  ---------                  --------
         <S>                                <C>                        <C>
         W. Preston Wilson                  2,739,109                  225,058
         Charles A. French                  2,737,794                  226,373
         H. Robert Gill                     2,739,209                  224,958
         Philip A. Gordon                   2,739,209                  224,958
         William Sanko                      2,737,794                  226,373
</TABLE>

         (b)  The QualMark 1996 Stock Option Plan was amended to increase the
number of shares from 415,000 shares to 665,000 shares by of vote of 1,184,807
in favor and 431,914 against and 1,347,446 abstentions.

         (c)  PricewaterhouseCoopers LLP, independent public accountants, were
selected as the auditors of the Company for the fiscal year ending December
31, 1999, by a vote of 2,940,669 in favor and 23,498 against.


Item 6   Exhibits and Reports on Form 8-K.

   (a)   Exhibits - See Index to Exhibits

   (b)   Reports on Form 8-K during the quarter ended June 30,
         1999 - none.


                                      15

<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                              QualMark Corporation



Date:  August 19, 1999              By: /s/ W. PRESTON WILSON
       ---------------                 ----------------------------------
                                       W. Preston Wilson
                                       President, Chief Executive Officer


Date:  August 19, 1999                  /s/ VERNON W. SETTLE
       ---------------                 ----------------------------------
                                       Vernon W. Settle
                                       VP, Finance & Administration
                                       Principal Accounting Officer


                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>

Exhibit             Description
Number              -----------
------
<S>                 <C>
3.1                 Amended and Restated Articles of Incorporation of the
                    Company. (1)
3.2                 Amended and Restated Bylaws of the Company. (1)
4.1                 Form of Certificate for Shares of Common Stock. (1)
4.6                 Form of Warrant issued to holders of 10% secured promissory
                    notes. (1)
10.1                QualMark Corporation 1993 Incentive Stock Option Plan. (1)
10.2                QualMark Corporation 1996 Stock Option Plan. (3)
10.3                Employment Agreement dated March 1, 1993 by and between the
                    Company and W. Preston Wilson. (1)
10.4                Employment Agreement dated August 15, 1994 by and between
                    the Company and J. Wayne Farlow. (1)
10.5                Agreement dated September 30, 1995 by and between the
                    Company and Gregg K. Hobbs. (1)
10.8                Addendum to Agreement dated as of December 21, 1995 by and
                    between the Company and Gregg K. Hobbs. (1)
10.11               Loan and Security Agreement dated April 30, 1996, by and
                    between QualMark Corporation and Silicon Valley Bank, as
                    amended by Amendment to Loan and Security Agreement dated
                    August 18, 1997. (2)
10.12               Loan and Security Agreement dated December 22, 1998,


                                      16

<PAGE>

                    by and between QualMark Corporation and U.S. Bank National
                    Association. (4)
10.13               Waiver and Amendment to Loan Agreement dated March 15, 1999
                    by and between QualMark and U.S. Bank National Association.
                    (4)
27.1                Financial Data Schedule
</TABLE>

-------------------------------------------------------------------------------
(1)  Incorporated by reference from the Company's Registration Statement No.
     333-1454-D on Form SB-2.
(2)  Incorporated by reference from the Company's Quarterly Report on Form
     10-QSB for the quarter ended September 30, 1997.
(3)  Filed as an Exhibit to the Company's Proxy Statement for the 1996 Annual
     Meeting of Shareholders.
(4)  Filed as an exhibit to the Company's Annual Report of Form 10-KSB for the
     year ended December 31, 1998.


                                      17