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Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security
(Instr. 3) 2. Trans. Date 2A. Deemed Execution Date, if any 3. Trans. Code
(Instr. 8) 4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4)
Code V Amount (A) or (D) Price
Common Stock 12/11/2014 P 134 A $1.15 4418250 D
Common Stock 12/15/2014 P 21200 A $1.15 4439450 D
will gladly add down here with Bronson->
Date/Time
Description
Amount
Net Cash Balance
12/05/2014 15:24:23 Bought 3652 BKFG @ 1.15
-4,206.80 ---
12/08/2014 15:57:35 Bought 5000 BKFG @ 1.1
-5,507.00 ---
12/08/2014 15:58:13 Bought 1348 BKFG @ 1.1
-1,489.80 ---
12/16/2014 09:47:28 Bought 2500 BKFG @ 1.15
-2,882.00 ---
12/16/2014 09:47:29 Bought 2500 BKFG @ 1.15
-2,875.00 ---
Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security
(Instr. 3) 2. Trans. Date 2A. Deemed Execution Date, if any 3. Trans. Code
(Instr. 8) 4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4)
Code V Amount (A) or (D) Price
Common Stock 12/8/2014 P 2500 (1) A $1.11 4413149 (2) I By Daughter
Common Stock 12/8/2014 P 4967 (3) A $1.11 4418116 (4) I By Son
Main difference so far appears to be sudden push of cash into Interlink Electronics shares and as a result an increase in marketable securities. Interlink just announced latest quarter and it sort of completes Bronson's turnaround of that company, solid across the board and probably why BKF put some capital to work there, should make some money on that investment. Looks like they entered in after the forward split.
No word on that fascinating section in the Quarterly, same as last Quarter. Spelled out below. Would be a very attractive merger or business combo target with the amount of cash on hand and the large NOL. Many options as this section spells out.
Haha...and there it is 3 minutes after :) Will dig in and take a look.
Would expect Q today or tomorrow based on RDGA and FNSI filings.
Still can't get around the fact that Bronson has bought up ~$360,000 of the common stock here since August last year right after the successful takeover of QBAK. Not a small amount of money and he shows no signs of letting up, with almost $80,000 in purchases since June. And it doesn't appear the PPS is effecting that trend, he continues to buy. What is he planning?
Bid side much stronger now too, that 1.45 level should have good support now that we broke through. Historically strong resistance there.
There we go, the inevitable move upward on small volume, breaking out to new highs. If this ever did get strong volume upward will move fast now. If Bronson's buying I will continue to.
form 4, Bronson more buying
Title of Security
(Instr. 3) 2. Trans. Date 2A. Deemed Execution Date, if any 3. Trans. Code
(Instr. 8) 4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4)
Code V Amount (A) or (D) Price
Common Stock 6/24/2014 P 500 A $1.39 4376698 D
Common Stock 6/24/2014 P 4951 A $1.4 4381649 D
Common Stock 6/25/2014 P 4000 A $1.39 4385649 D
form 4, Bronson, 19000 A $1.27
Haha, welcome!! :) Yeah, something interesting with Bronson, I like his plays but who knows how long these will take to pan out. Curious how these all will crossover (i.e. QBAK, BKFG, FNSI etc.). But either way shareholder friendly and I like his track record and very close to a multi-year high. I pour some profits in here bit by bit.
finally joined u, couldn't hold off any longer with recent action, albeit only a small position
g/l!
Thanks for the update
little update.
So, since 2008 and Bronson taking over there have been open market buys by insiders (primarily Bronson) of BKFG stock of approximately $6,934,342 and no selling.
There has also been increased buying in the month of December on BKFG. This has coincided with strong buying by Bronson of QBAK stock as well. Bronson clearly buying things up more aggressively of late ( http://www.secform4.com/insider-trading/1000383.htm)
Finally, new website in the last few days for BKF Capital. Not sure exactly why as pretty much same thing, and actually looks worse, but we’ll see. Moves are happening with Bronson, just waiting to see where this goes.
Good to know more than a couple of us :) Yeah watching Bronson's moves, he's continuing to buy in recent days, I think he's up to over 55% ownership this year from ~50% last year. Slow steady buys of BKFG stock. And then using it to continue to make purchases (over 20% now) of QBAK. He must see some payday here, we'll see. Definetly like following his movements thought, he is one of the more interesting distressed debt players out there.
At least 3. Have had this and QBAK on watch for a while. 4 according to the iBox, but that may be recent.
Latest 10Q shows switch to equity method for QBAK, a sign of increased control. They also removed language that they should not be considered an investment company.That switch should make the holding company concept more clear for SEC purposes.
How this plays into the bigger picture still not known, but if there were cash dividends given out equity method more beneficial for BKFG. The big question I have is what is Bronson's plan with the new BKFG subsidiary and it's relation to the companies QBAK holdings.
Bronson continued his share acquisition today. What are his plans? What are his plans :)
I really like that idea of the buyback, could they just use heavy cash position to accomplish this without monetizing data storage side? I know they had talked about using marketable securities to give dividend to shareholders last year, but maybe they will use for a buy back as well.
Going through more DD, have a hard time seeing much downside to the stock at the moment, got alot more upside. If you see any downside risk curious what you think that might be. Otherwise, to me at $1.08 it seems like as good a bet as any penny stock.
Another little tidbit from QBAK update:
Envision quick monetization of the data storage business.
Proceeds could be used to buy back stock. BKFG could then increase its stake without spending another dime due to shrinking number of shares outstanding.
BKF Asset Holdings, Inc. was formed on 1/26/12, just prior to the first proxy battle for Qualstar. Prior to that everything had been running through BKF Investment Group. It appears they structurally split the company into a continued asset management role and a holding company role perhaps.
https://delecorp.delaware.gov/tin/GINameSearch.jsp
Only 2 watching this stock now, I guess my DD lost 1 :)
Not same terminology as 10-K, but from the website. We know they plan to acquire companies, will that begin with QBAK or at least a portion of QBAK, power supply component?
An article which still seems relevant from two years ago in light of what is happening. Obviously balance sheet numbers have changed however.
http://seekingalpha.com/article/247467-qualstar-a-merger-acquisition-target
Shifts in latest 10-Q that I find interesting:
Addition of this language on Item 5 from previous 10-Q:
Very interesting developments continue. Mr. Bronson is clearly a man on a mission and finally succeeding with his takeover of QBAK, curious what his next move will be. He has been very active with numerous companies since 2008. I know he had mentioned selling off the tape libraries part of the business and giving proceeds to shareholders, but does he have bigger plans?
At moment, a bunch of cash (~$6,000,000), sizable investment (~$3,000,000) in QBAK which they control, not alot in the way of liabilities. Does he view BKFG as solely an investment vehicle or more as a holding company? Not quite sure, but the coming months could make things alot clearer IMO.
Qualstar Announces the Appointment of Steven N. Bronson as Interim CEO and President and the Termination of the Rights Agreement (7/15/13)
SIMI VALLEY, CA, Jul 15, 2013 (Marketwired via COMTEX) -- Qualstar Corporation, a manufacturer of data storage solutions and high-efficiency power supplies, today announced the appointment of Steven N. Bronson as interim Chief Executive Officer and President of Qualstar. Mr. Bronson replaces outgoing CEO, Lawrence Firestone.
The newly elected Board of Directors (the "Board") initiated its first step to dramatically reduce Qualstar's cost structure by terminating the employment of Lawrence D. Firestone for cause as of July 10, 2013, and several other executives as of July 31, 2013. All of these executives were based in Denver, Colorado and were hired in the last 12 months while Mr. Firestone served as CEO and President of Qualstar. The Board estimates that these measures should result in annual savings of approximately $1,000,000.
Since taking control of Qualstar, the Board learned for the first time that on May 9, 2013, Mr. Firestone entered into a two year lease (with a one year minimum) on a 3,000 square foot office in the Denver, Colorado (the "Denver Office") that was used by Mr. Firestone and his executive management team. Mr. Firestone opened the Denver Office even though Qualstar was losing money, in the midst of a proxy contest for control and its headquarters and a majority of its employees and operations are based in Simi Valley, California.
"I believe that it is vital for any successful turnaround that executive management works closely with the rest of their team and that expenses need to be controlled and reduced wherever possible," said Steven N. Bronson, interim CEO and President. Mr. Bronson continued that "we expect to close the recently opened Denver, Colorado office within the next 90 days. We believe that the results of the 2013 annual meeting constitute a shareholder mandate to reverse Qualstar's negative financial trend, and the Board is committed to delivering on this directive. The Board will continue to take the appropriate actions to right-size Qualstar, support its current and future business, build a solid foundation and preserve its liquidity base."
Separately, Qualstar announced that on July 3, 2013, the Board amended the Rights Agreement, dated February 5, 2013 between Qualstar and Corporate Stock Transfer, Inc., as rights agent (the "Rights Agreement"), by advancing the final expiration date of the Rights Agreement from the close of business on January 31, 2014 to the close of business on July 3, 2013. Effective on the close of business on July 3, 2013, the Rights Agreement is no longer effective.
About Qualstar Corporation
Qualstar, founded in 1984, is a diversified electronics manufacturer specializing in data storage and power supplies. Qualstar's products are known throughout the world for high quality and Simply Reliable designs that provide years of trouble-free service. More information is available at www.qualstar.com or www.n2power.com or by phone at 805-583-7744.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains forward-looking statements relating to expectations, plans or prospects for Qualstar Corporation that are based upon the current expectations and beliefs of Qualstar's management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Notwithstanding changes that may occur with respect to matters relating to any forward looking statements, Qualstar does not expect to, and disclaims any obligation to, publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Qualstar, however, reserves the right to update such statements or any portion thereof at any time for any reason. In particular, the following factors, among others, could cause actual or future results to differ materially from those suggested by the forward-looking statements: Qualstar's ability to successfully execute on its strategic plan and meet its long-term financial goals; Qualstar's ability to successfully implement and recognize cost savings; Qualstar's ability to develop and commercialize new products; industry and customer adoption and acceptance of Qualstar's new products; Qualstar's ability to increase sales of its products; the rescheduling or cancellation of customer orders; unexpected shortages of critical components; unexpected product design or quality problems; adverse changes in market demand for Qualstar's products; increased global competition and pricing pressure on Qualstar's products; and the risks related to actions of activist shareholders, including the amount of related costs.
For further information on these and other and other cautionary statements, please refer to the risk factors discussed in Qualstar's filings with the U.S. Securities and Exchange Commission including, but not limited to, Qualstar's Annual Report on Form 10-K for the fiscal year ended June 30, 2012, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of such Form 10-K, and any subsequently filed reports. All documents also are available without charge through the SEC's website (www.sec.gov) or from Qualstar's website (www.qualstar.com).
Contact:
Philip Varley, CFO
Email Contact
805-583-7744 x 114
Vanessa Lehr/Annie Leschin
Investor Relations
StreetSmart Investor Relations
(415) 775-1788
http://www.marketwatch.com/story/qualstar-announces-the-appointment-of-steven-n-bronson-as-interim-ceo-and-president-and-the-termination-of-the-rights-agreement-2013-07-15
Qualstar Announces the Results of 2013 Annual Meeting of Shareholders (7/01/13)
SIMI VALLEY, CA--(Marketwired - Jul 1, 2013) - Qualstar Corporation (NASDAQ: QBAK), a manufacturer of data storage solutions and high-efficiency power supplies, today announced the results for its 2013 Annual Meeting of Shareholders held Friday, June 28, 2013. Based on information provided by the independent inspector of election, IVS Associates, Inc., shareholders have voted to elect Steven N. Bronson, Alan B. Howe, Sean M. Leder, Dale E. Wallis and David J. Wolenski as members of the Qualstar Board. Bronson, Howe, Leder, Wallis and Wolenski were nominated by BKF Capital Group, Inc. which, as the holder of 18.3% of Qualstar's common stock, is the company's second largest shareholder.
"As we move past a contested election for representation on the Qualstar Board of Directors, we welcome Steven Bronson, Alan Howe, Sean Leder, Dale Wallis and David Wolenski to the Qualstar Board. I look forward to working collaboratively to ensure a smooth board transition," said Lawrence D. Firestone, Qualstar's President and Chief Executive Officer. "We can now focus our full attention to our ongoing efforts to transform Qualstar and position it for long-term growth, sustainable profitability, market leadership and enhanced value for our shareholders. I would like to thank all of our departing directors for their service, dedication and commitment to Qualstar. I am particularly grateful to Allen Alley for his exemplary leadership as our independent Chairman of the Board."
Qualstar also announced that information provided by the independent inspector of election indicates that shareholders appear to have voted to (i) not ratify the adoption by the Qualstar Board of the Rights Agreement, dated February 5, 2013, by and between Qualstar and Corporate Stock Transfer, Inc., as Rights Agent, (ii) approve the amendment and restatement of the Qualstar Corporation 2008 Stock Incentive Plan, and (iii) approve the appointment of SingerLewak LLP as the independent registered public accounting firm to audit Qualstar's financial statements for the fiscal year ending June 30, 2013.
These results are based on the receipt of the official confirmation by the independent inspector of elections which was received earlier today.
About Qualstar Corporation
Qualstar, founded in 1984, is a diversified electronics manufacturer specializing in data storage and power supplies. Qualstar's products are known throughout the world for high quality and Simply Reliable designs that provide years of trouble-free service. More information is available at www.qualstar.com or www.n2power.com or by phone at 805-583-7744.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains forward-looking statements relating to expectations, plans or prospects for Qualstar Corporation that are based upon the current expectations and beliefs of Qualstar's management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Notwithstanding changes that may occur with respect to matters relating to any forward looking statements, Qualstar does not expect to, and disclaims any obligation to, publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Qualstar, however, reserves the right to update such statements or any portion thereof at any time for any reason. In particular, the following factors, among others, could cause actual or future results to differ materially from those suggested by the forward-looking statements: Qualstar's ability to successfully execute on its strategic plan and meet its long-term financial goals; Qualstar's ability to successfully implement and recognize cost savings; Qualstar's ability to develop and commercialize new products; industry and customer adoption and acceptance of Qualstar's new products; Qualstar's ability to increase sales of its products; the rescheduling or cancellation of customer orders; unexpected shortages of critical components; unexpected product design or quality problems; adverse changes in market demand for Qualstar's products; increased global competition and pricing pressure on Qualstar's products; and the risks related to actions of activist shareholders, including the amount of related costs.
For further information on these and other and other cautionary statements, please refer to the risk factors discussed in Qualstar's filings with the U.S. Securities and Exchange Commission including, but not limited to, Qualstar's Annual Report on Form 10-K for the fiscal year ended June 30, 2012, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of such Form 10-K, and any subsequently filed reports. All documents also are available without charge through the SEC's website (www.sec.gov) or from Qualstar's website (www.qualstar.com).
Contact Information
For more information, contact:
Vanessa Lehr/Annie Leschin
Investor Relations
StreetSmart Investor Relations
(415) 775-1788
http://www.marketwire.com/press-release/qualstar-announces-the-results-of-2013-annual-meeting-of-shareholders-nasdaq-qbak-1807537.htm
BKF Urges Qualstar Shareholders to Focus on the Real Facts and Issues and Vote to Elect the BKF Nominees at the 2013 Annual Meeting (6/21/13)
BOCA RATON, Fla.--(BUSINESS WIRE)--BKF Capital Group, Inc. (OTCQB: BKFG), the second largest shareholder of Qualstar Corporation (NASDAQ: QBAK), today commented on the real facts and issues in BKF’s contest to replace the Board of Directors of Qualstar and elect BKF’s highly experienced, highly qualified and highly motivated nominees at the Qualstar Annual Meeting of Shareholders on June 28, 2013.
Steven Bronson, BKF’s chief executive officer, remarked: “As the contest for the future of Qualstar approaches its final stages, shareholders should focus on the real facts and issues, and not be swayed by the Company’s assurances of recovery at some unspecified future time, or the formulaic analyses of the proxy advisory services which we believe are simply wrong.”
“The facts are that the Company is burning through its cash and does not have a large runway for recovery. Qualstar’s results for the nine months ended March 31, 2013, under the Company’s new CEO Lawrence Firestone, were the worst ever. Unlike BKF, the current Board has only a nominal investment in Qualstar. Its strategy is to throw money at a problem—the continuing drain of the tape storage business—that cannot be solved by money alone.”
“BKF’s nominees are highly skilled and experienced and are incentivized to run the Company for its owners, because BKF is a substantial owner. We want what you want—prudent cash management, a strategy for the tape storage business that is based on market realities and a return to profitability in the very near turn.”
Mr. Bronson concluded: “We ask our fellow shareholders to read this release in full, together with BKF’s other materials, and vote to elect BKF’s nominees on the GOLD proxy card.”
Money: The Board is Spending the Company’s Money Like It Belongs to Somebody Else
As BKF has been saying for well over a year, there are serious challenges facing Qualstar, particularly in its tape storage business. The solution of the Board and CEO Lawrence Firestone has been to throw money at the problem, substantially increasing G&A, increasing Sales and Marketing costs, and increasing Engineering costs. The consequence of this strategy has been a staggering cash burn of over $6 million in the past nine months, even with the Board’s highly touted outsourcing of manufacturing operations.
The Company’s approach to this proxy contest is just one example of the disregard that the Board and Mr. Firestone have for shareholder money. After spending over $600,000 to thwart BKF’s non-coercive partial tender offer in January, the Company says it will be spending $500,000 in this proxy contest. That’s a total of over $1.1 million!
In this proxy contest, BKF sent out one mailing. The Company sent out three. BKF did a simple homegrown investor presentation. The Company posted two versions of a graphically enhanced, professionally designed presentation. And why not? It’s not their money.
Is Qualstar a Start-Up Company? The Current Chairman of the Board Seems to Think So
On the Company’s investor call this week, the current Chairman of the Board, Allen Ally said “Qualstar has the feeling of a very exciting startup company.” What does that mean? It means a company that can run through its cash, with the anticipation that somebody, somehow is going to come up with more. It means a company that’s under no pressure to earn a profit. It means a company that expects its stock price to be buoyed by promises of future success and is not grounded in current performance.
If that’s what the Company’s current Chairman believes, then shareholders can begin to understand why Qualster is headed in a direction of unconstrained spending, no profitability and promises instead of performance.
Of course, Qualstar is not a startup. It has been in business for almost 30 years. The markets and shareholders rightfully want to see profits and performance now.
Unfortunately, ISS Got It Wrong—Shareholders Should Not Make the Same Mistake
The Company is touting its ISS recommendation. Unfortunately, ISS is wrong in its analysis, and were shareholders to make the same mistake, BKF believes they will see the value of their investment in the Company continue to erode.
ISS looked at TSR (Total Shareholder Return) for the 12 month period ending June 2012, noted that the Company’s TSR rose from November 2012 to May 2013 and attributed this to the actions of the current Board. But of course on May 14, 2013—when the Company released its third quarter and nine month numbers with record losses—the Company’s stock price plummeted to its November 2012 levels.
ISS says “There is little doubt the company’s restructuring efforts combined with uncertainty surrounding a myriad of events, particularly, BKF’s tender offer and the ensuing proxy contest, were distractions that may have impacted negatively on the company’s TSR since May 2013.”
Really? This is the Company’s story. The abysmal nine month numbers are the fault of BKF. Shareholders should be the judge of whether this makes any sense. In the view of BKF—and BKF believes that other shareholders agree—it does not. The Company’s stock price simply reflects the fundamental flaws in the overdrive spending strategy of the current Board that was revealed in the Company’s third quarter results.
So What Is the Fundamental Flaw in the Strategy of the Current Board?
As BKF has repeatedly explained, no matter how much of the Company’s remaining cash—which has already been substantially depleted—the Board throws at the tape storage business, it will not cure the basic problem. The Company cannot go it alone in this business. Technology is moving away from tape storage, customers are bundling their tape storage with other hardware purchases and other players in this space—think for example IBM and Oracle—are far larger and have many times the resources of the Company. That is why the Company’s most direct competitors—Overland Storage and Quantum Corp., which are larger than Qualstar—are hurting.
To compound the issue, according to the Company’s recent investor presentation, Qualstar is now proposing to move to the higher end tape storage market where it would be competing directly with the likes of IBM and Oracle. This, we believe, is a recipe for disaster.
Why Did BKF Decline Mr. Firestone’s Offer to Join the Current Board?
The Company has faulted BKF for refusing to accept its offer of two Board seats. First, BKF needs to set the record straight.
•Before the special meeting in June of last year, BKF approached Mr. Firestone with a fair proposal for equal representation on the board, a mutual agreement on the fifth seat and a modification of Mr. Firestone’s employment agreement to reduce his egregious compensation package. Mr. Firestone never responded to the offer despite giving his word to get back to BKF within two weeks.
•Mr. Firestone then reached out to BKF at the end of 2012 to get BKF to register, and perhaps sell its shares, as part of a shelf registration paid for with the Company’s money. BKF declined.
•BKF didn’t hear from Mr. Firestone again until April 2013, when it was clear that BKF was following through on its previously disclosed intentions of running a slate for the annual meeting.
•Mr. Firestone did not, as the Company claims, offer BKF two Board seats. He offered BKF one Board seat, with a second Board seat for Alan Howe. BKF is proud to have Mr. Howe, with his reputation and experience, on its slate, but Mr. Howe is independent of BKF. As Mr. Firestone well knew, Mr. Howe was suggested to BKF by another major Qualstar shareholder and has no prior relationship with Steven Bronson, BKF’s CEO.
Second, BKF took Mr. Firestone’s offer of Board representation under careful consideration but decided to wait until the Company announced its third quarter and nine month results. When BKF saw those results, with record losses and cash burn, it determined that working to change the direction of the Company with the existing Board would be futile. Moreover, BKF was concerned with the fact that on May 8, 2013, Qualstar increased the size of its Board to 7 members and appointed Bud Lahber, a friend of Mr. Firestone, as a new member of the Board.
Why Does BKF Lack Confidence in Current Management?
Mr. Firestone, who was named CEO in June 2012 and has presided over the Company’s abysmal performance in the first nine months of fiscal 2013, has no prior experience as a CEO.
The other current members of the Board that the Company has nominated for re-election have long standing relationships with Mr. Firestone—they are handpicked, as the Company likes to say. For example, on the recent investor call, Bud Lahber explained the reason he joined the Board was his personal relationship with Mr. Firestone.
In June 2012, Mr. Firestone committed the Company to breakeven or profitable operations by June 2013. That of course has not happened, and the Company is not even close to achieving this milestone. In the recent investor presentation, Mr. Firestone made no commitment as to when the Company will be profitable and has established unquantifiable “mid-term” and “long-term” targets, so as to not be held accountable
What is the Strategy of the BKF Nominees?
If elected, the BKF nominees will run a lean organization. Our nominees realize that the Company’s resources are limited and that every dollar must be spent prudently.
Our nominees will reward management, but executive compensation will principally be performance based.
Our nominees realize that the only way for the Company to extricate itself from the problems that are plaguing the tape storage business will be to partner with another strategic player to leverage resources and increase market penetration.
Our nominees will thoroughly review all strategic options, from continuing to operate as a standalone company to a business combination or reorganization. There will be only one objective, and that is to maximize value for all shareholders in which BKF will share proportionately.
Why Should Shareholders Trust the BKF Nominees?
The current Board still has only a nominal financial investment in the Company. In contrast, BKF is the Company’s second largest shareholder, with millions of dollars invested in Qualstar. The interests of BKF are directly aligned with the interests of all other shareholders, and its fortunes will rise or fall with the fortunes of everyone else.
What Should Shareholders Do?
BKF has determined that the only way to fix Qualstar is to replace the Board with new independent directors. BKF is therefore asking for the help of all shareholders to elect the directors nominated by BKF on the GOLD proxy card.
Therefore no matter how many or how few shares a shareholder owns, it is important to return the GOLD proxy card and vote FOR the election of the five nominees of BKF, and as recommended by BKF on the other proposals at the 2013 Annual Meeting.
Do not return the WHITE proxy card or any other card furnished by or on behalf of the Company. Remember that only the last vote will count. Even if a shareholder has voted on the Company’s WHITE proxy card, that vote may be revoked by returning a later dated GOLD proxy card in favor of the BKF nominees and as recommended by BKF on the other proposals.
If shareholders have any questions, require assistance in voting their shares, or need additional copies of BKF’s Proxy Statement, please contact BKF’s proxy advisors—
AST PHOENIX ADVISORS
6201 15th AVENUE
3RD FLOOR
BROOKLYN, NY 11219
CALL TOLL FREE: (877) 478-5038
BANKS AND BROKERS CALL COLLECT: (212) 493-3910
About BKF Capital Group Inc.
BKF Capital Group Inc. is a publicly traded company that intends to create an asset management platform with investment vehicles that focus on areas of portfolio management that typically receive less attention from investors but also present unique investment opportunities. BKF is also engaged in seeking to arrange an acquisition, with an operating business with revenues, at least three years of operating history and unique value opportunities. For additional information please visit: www.bkfcapital.com.
Contacts
BKF Capital Group, Inc.
Maria Fregosi, 561-362-4199 x 209
mfregosi@bkfcapital.com
http://www.businesswire.com/news/home/20130621005707/en/BKF-Urges-Qualstar-Shareholders-Focus-Real-Facts
BKF Capital Issues Open Letter To Qualstar Shareholders; Urges Shareholders Not to be Fooled By the Company’s Investor Presentation (6/14)
http://www.businesswire.com/news/home/20130614005637/en/BKF-Capital-Issues-Open-Letter-Qualstar-Shareholders
Qualstar Makes Investor Presentation Publicly Available and Announces Conference Call for Shareholders on June 19, 2013 (6/13)
http://www.marketwire.com/press-release/qualstar-makes-investor-presentation-publicly-available-announces-conference-call-shareholders-nasdaq-qbak-1801468.htm
Qualstar Urges Shareholders to Question BKF's and Bronson's Ulterior Motives for Seeking Control of Qualstar (6/12/13)
http://www.marketwire.com/press-release/qualstar-urges-shareholders-question-bkfs-bronsons-ulterior-motives-seeking-control-nasdaq-qbak-1800982.htm.
Qualstar Sends Letter to Shareholders (6/10/13)
Urges Shareholders to Vote White Proxy Card and Reject Dissident Group's Latest Attempt to Obtain Control of Qualstar Without Paying Shareholders a Control Premium
http://www.marketwatch.com/story/qualstar-sends-letter-to-shareholders-2013-06-10
Qualstar Commences Mailing of Definitive Proxy Materials (6/05/13)
Recommends Shareholders to Vote White Proxy Card to Reject Dissident Group's Latest Attempt to Obtain Control of Qualstar Without Paying Shareholders a Control Premium
SIMI VALLEY, CA--(Marketwired - Jun 5, 2013) - Qualstar Corporation (NASDAQ: QBAK), a manufacturer of data storage solutions and high-efficiency power supplies, today announced that it has commenced the mailing of definitive proxy materials to its shareholders for Qualstar's Annual Meeting of Shareholders to be held on Friday, June 28, 2013. Qualstar's shareholders of record as of the close of business on May 20, 2013 will be entitled to attend and vote at the Annual Meeting.
Qualstar's Board of Directors recommends that shareholders vote to elect Qualstar's very experienced and highly-qualified director nominees -- Allen H. Alley, Chester Baffa, Lawrence D. Firestone, Gerald J. Laber and Daniel C. Molhoek -- by voting the WHITE proxy card by telephone, Internet or mail.
Qualstar strongly urges shareholders to vote only the WHITE proxy card and discard any proxy card they may receive from BKF Capital Group, Inc. and its controlling shareholder, Steven N. Bronson and reject their latest attempt to obtain control of Qualstar without paying shareholders a control premium. After being rebuffed in their most recent opportunistic attempt to take control of Qualstar through a coercive partial tender offer at a price that would have deprived tendering shareholders of the ability to participate in, and benefit from, the future growth and value potential of Qualstar, BKF and Mr. Bronson have now launched a proxy contest to take control of Qualstar by having five of its own hand-picked nominees elected to the Qualstar Board.
BKF's interests in taking control of Qualstar may not be aligned with those of other shareholders. BKF is an entity that has two employees, including Mr. Bronson, and an intern, no operating business and no revenues from operations. As it admits in its filings with the SEC, BKF Capital is currently facing the risk of being deemed a regulated investment company subjected to related restrictions and, accordingly, needs to consummate an acquisition or merger or other business combination with a viable business entity such as Qualstar to avoid adverse regulatory consequences. Qualstar believes that BKF has not fully disclosed its plans for Qualstar and is pursuing control of Qualstar for its own interests that are not aligned with those of other shareholders. Shareholders looking for further evidence as to whether BKF may have conflicting interests are encouraged to review the materials filed with the SEC this past January by BKF and Mr. Bronson in connection with their coercive partial tender offer, and the statement made by BKF that "n establishing the purchase price, . . ., the Purchaser [BKF] was motivated to establish the lowest price that might be acceptable to shareholders consistent with the Purchaser's [BKF's] objectives."
Lawrence D. Firestone, Qualstar President and Chief Executive Officer, said, "As we continue to execute our strategic turnaround plan for Qualstar and position the company for financial success, Mr. Bronson and BKF are pursuing their proxy contest for control of Qualstar despite our numerous attempts to reach an amicable settlement and avoid the needless, costly and wasteful distraction. The previous failed attempts by Mr. Bronson and BKF to take control of Qualstar, without offering to pay our shareholders an appropriate control premium, have forced our Board and management team to devote significant resources -- including management time and shareholder money -- to protect the interests of ALL shareholders, when these resources could have been better devoted to our ongoing efforts towards the growth of Qualstar. We remain committed to transforming and refocusing Qualstar on its growing core storage and power supply businesses and, accordingly, driving sustainable revenue, profitable growth and cash flow, and increasing returns for ALL shareholders."
About Qualstar Corporation
Qualstar, founded in 1984, is a diversified electronics manufacturer specializing in data storage and power supplies. Qualstar's products are known throughout the world for high quality and Simply Reliable designs that provide years of trouble-free service. More information is available at www.qualstar.com or www.n2power.com or by phone at 805-583-7744.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains forward-looking statements relating to expectations, plans or prospects for Qualstar Corporation that are based upon the current expectations and beliefs of Qualstar's management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Notwithstanding changes that may occur with respect to matters relating to any forward looking statements, Qualstar does not expect to, and disclaims any obligation to, publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Qualstar, however, reserves the right to update such statements or any portion thereof at any time for any reason. In particular, the following factors, among others, could cause actual or future results to differ materially from those suggested by the forward-looking statements: Qualstar's ability to successfully execute on its strategic plan and meet its long-term financial goals; Qualstar's ability to successfully implement and recognize cost savings; Qualstar's ability to develop and commercialize new products; industry and customer adoption and acceptance of Qualstar's new products; Qualstar's ability to increase sales of its products; the rescheduling or cancellation of customer orders; unexpected shortages of critical components; unexpected product design or quality problems; adverse changes in market demand for Qualstar's products; increased global competition and pricing pressure on Qualstar's products; and the risks related to actions of activist shareholders, including the amount of related costs.
For further information on these and other and other cautionary statements, please refer to the risk factors discussed in Qualstar's filings with the U.S. Securities and Exchange Commission including, but not limited to, Qualstar's Annual Report on Form 10-K for the fiscal year ended June 30, 2012, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of such Form 10-K, and any subsequently filed reports. All documents also are available without charge through the SEC's website (www.sec.gov) or from Qualstar's website (www.qualstar.com).
Additional Information and Where To Find It
In connection with its 2013 Annual Meeting of Shareholders, Qualstar has filed a definitive proxy statement and a WHITE proxy card with the SEC on June 4, 2013, and has commenced the mailing of a definitive proxy statement and WHITE proxy card to its shareholders. WE URGE INVESTORS AND SHAREHOLDERS TO READ THE DEFINITIVE PROXY STATEMENT AND WHITE PROXY CARD FOR THE 2013 ANNUAL MEETING OF SHAREHOLDERS (INCLUDING ANY SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT QUALSTAR WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Shareholders will be able to obtain, free of charge, copies of the definitive proxy statement and any other documents filed by Qualstar with the SEC in connection with the 2013 Annual Meeting at the SEC's website (www.sec.gov), at Qualstar's website (www.qualstar.com) or by writing to Mr. Lawrence D. Firestone, President and Chief Executive Officer, Qualstar Corporation, 3990-B Heritage Oak Court, Simi Valley, CA 93063. In addition, copies of the proxy materials, when available, may be requested from the Company's proxy solicitor, MacKenzie Partners, Inc., 105 Madison Avenue, New York, NY 10016 or toll-free at (800) 322-2885.
Certain Information Regarding Participants in the Solicitation
Qualstar, its directors, nominees for director and certain officers, employees and other persons are deemed to be participants in the solicitation of proxies from shareholders in connection with the 2013 Annual Meeting of Shareholders. Information regarding the interests of such participants is included in the definitive proxy statement and other relevant documents filed and to be filed by Qualstar with the SEC in connection with the proxy solicitation.
Contact Information
For more information, contact:
Mark H. Harnett / Paul Schulman
MacKenzie Partners, Inc.
(212) 929-5500
Vanessa Lehr/Annie Leschin
Investor Relations
StreetSmart Investor Relations
(415) 775-1788
http://www.marketwire.com/press-release/qualstar-commences-mailing-of-definitive-proxy-materials-nasdaq-qbak-1798733.htm
BKF Capital Issues Stop, Look and Listen Letter to Qualstar Shareholders (6/05/13)
BOCA RATON, Fla.--(BUSINESS WIRE)--BKF Capital Group, Inc. (OTCQB – “BKFG”), the second largest shareholder of Qualstar Corporation, announced today that it issued an open letter urging shareholders of Qualstar Corporation (NASDAQ – “QBAK”) to STOP, LOOK and LISTEN before taking any action in response to the Company’s solicitation of proxies for the 2013 Annual Meeting of Shareholders. The complete text of the letter to shareholders follows:
BKF CAPITAL GROUP, INC.
225 N.E. Mizner Blvd., Suite 400
Boca Raton, FL 33432
Phone 561.362.4199
Fax 561.363.4722
June 4, 2013
AN IMPORTANT MESSAGE FROM:
BKF CAPITAL GROUP, INC.
TO: FELLOW SHAREHOLDERS OF
QUALSTAR CORPORATION
BKF Capital Urges Qualstar Shareholders to Look for the GOLD Proxy Card
For The Qualstar 2013 Annual Meeting
Dear Fellow Qualstar Shareholder:
At some point in the near future, you should receive a proxy statement from Qualstar Corporation in connection with its 2013 Annual Meeting. Qualstar will seek your vote for the election of current directors to the board. BKF Capital Group, Inc. will be running its own slate of highly qualified candidates to the board. We strongly urge you NOT to vote any proxy card sent to you by the Company, and to wait for BKF Capital’s proxy materials and GOLD proxy card.
Due to our continued frustration with the performance of Qualstar, BKF Capital is nominating five directors to be elected to Qualstar’s board. BKF Capital is seeking your support to elect our slate of directors, who have significant financial, managerial, operational, and electronics industry experience, and who will owe their allegiance to the shareholders of Qualstar.
The board of Directors of Qualstar may have turned over since then, but nothing has changed in Qualstar’s continuing to suffer net losses, declining revenues and a declining share price. In the first nine months of fiscal 2013, revenues are down almost 24% year over year and the Company has recorded a net loss of $6.9 million. And Mr. Firestone continues to serve as CEO.
BKF Capital is the second largest shareholder of Qualstar’s stock. Our interest is in building shareholder value, in which we will share proportionately with all other shareholders; as such our interests are directly aligned with yours. BKF Capital has invested approximately $3.8 million in Qualstar. In contrast, Qualstar’s current CEO, Lawrence Firestone, has only invested $3,400, and Qualstar’s nominees are reported by the Company to own in total 5,000 shares of stock.
We urge you to read BKF Capital’s proxy materials before you vote.
Notice: BKF Capital’s PROXY CARD for the 2013 Annual Meeting will be GOLD.
Who is BKF Capital?
BKF Capital, together with its principal shareholder Steven N. Bronson, is the owner of 2,297,119 shares or approximately 18.7% of Qualstar’s common stock. BKF Capital is a publicly traded company that intends to create an asset management platform with investment vehicles that focus on areas of portfolio management that typically receive less attention from investors but also present unique investment opportunities. BKF Capital is also seeking to arrange an acquisition with an operating business.
Why is BKF Capital seeking my vote?
In June 2012, BKF Capital conducted a contest to remove and replace the Qualstar board of directors because of the Company’s net losses, declining revenues and declining share price over the prior 9-10 years. BKF Capital also expressed concern over the manner in which the current chief executive officer, Mr. Lawrence Firestone, was at the time selected to his position. Shareholders owning a majority of shares cast in the special meeting last year voted in favor of BKF Capital’s slate and against the Qualstar board of directors, including Mr. Firestone, although this was less than the absolute majority which is required for removal of the incumbent directors under California corporate law.
The Board of Directors of Qualstar may have turned over since then, but nothing has changed. In the first nine months of fiscal 2013, revenues are down almost 24% year over year and the Company has recorded a net loss of $6.9 million. And Mr. Firestone continues to serve as CEO.
When is the Annual Meeting?
As strange as it sounds, we don’t know. Although it has filed preliminary proxy materials with the SEC, Qualstar has not yet announced the date of the 2013 Annual Meeting. Never before has Qualstar failed to hold its annual meeting later than March. However, this year the still unscheduled 2013 Annual Meeting will be held more than 15 months from the last Annual Meeting. We believe that the Company’s tactics regarding the scheduling of the 2013 Annual Meeting are a means of entrenchment.
What Should I Do Now?
Do not return any White Proxy Card you receive from Qualstar or any materials giving your broker, banker or trustee authority to execute any proxy in favor of the Qualstar nominees.
Wait until you receive BKF Capital’s proxy materials and GOLD proxy card before you cast your vote in connection with the 2013 Annual Meeting.
I M P O R T A N T
If your shares are held in Street Name only your bank or broker can vote your shares, and only upon receipt of your specific instructions. Please contact the person responsible for your account and instruct them NOT to vote at this time.
If you have any questions or need further assistance, please call Maria Fregosi at (561) 362-4199 Ext. 209 or our proxy solicitor: AST Phoenix Advisors, 6201 15th Avenue, 3rd Floor, Brooklyn, NY 11219, (877) 478-5038.
Thank you for your support.
Maria N. Fregosi
Chief Operating Officer
BKF Capital Group, Inc.
Participants in the Solicitation
The participants in the proxy solicitation by BKF Capital in connection with the 2013 annual meeting of Qualstar shareholders will include BKF Capital Group, Inc., a Delaware corporation, and, each of the individuals nominated by BKF Capital for election as directors at the 2013 annual meeting: Steven N. Bronson, Alan B. Howe, Sean M. Leder, Dale E. Wallis and David J. Wolenski.
BKF Capital is the record or beneficial owner of 2,239,419 shares of Qualstar common stock. Mr. Bronson is the beneficial owner of 57,700 shares, and may also be deemed to own beneficially the shares owned by BKF Capital. Except for BKF Capital and Mr. Bronson, none of the BKF participants owns any Qualstar securities.
Additional Information
BKF Capital intends to make a filing with the Securities and Exchange Commission of a definitive proxy statement and an accompanying proxy card to be used to solicit proxies in connection with the 2013 annual meeting of Qualstar shareholders. Shareholders are advised to read the definitive proxy statement and other documents related to the solicitation of shareholders for use at the 2013 annual meeting when they become available, because they will contain important information, including additional information relating to the participants in the proxy solicitation. When completed and available, BKF Capital’s definitive proxy statement and a form of proxy will be mailed to Qualstar shareholders. These materials and other materials filed by BKF Capital in connection with its proxy solicitation will be available at no charge on the SEC’s website at www.sec.gov. The definitive proxy statement and other relevant documents filed by BKF Capital with the SEC will also be available, without charge, from BKF Capital’s proxy solicitor, AST Phoenix Advisors. Call the toll-free number (877) 478-5038.
Contacts
BKF Capital Group, Inc.
Maria N. Fregosi, 561-362-4199 Ext. 209
Chief Operating Officer
http://www.businesswire.com/news/home/20130605005490/en/BKF-Capital-Issues-Stop-Listen-Letter-Qualstar
BKF Capital Announces Demand for Qualstar Records (5/29/13)
Intends to Nominate Seven Directors at the 2013 Annual Meeting of Shareholders
BKF CAPITAL ANNOUNCES DEMAND FOR QUALSTAR RECORDS
BKF Capital Group, Inc. (OTCQB: BKFG), announced today that it has served a demand on Qualstar Corporation (NASDAQ: QBAK) to examine its books and records supporting statements made about BKF in Qualstar’s earnings release and Form 10-Q for the quarter ended March 31, 2013. In the press release, Qualstar stated that results for the quarter were impacted “by the initiation and subsequent termination of a tender offer for shares of the company’s stock by BKF Capital Group, Inc., which adversely affected bookings and revenues for new equipment in the storage business.” The Qualstar Form 10-Q similarly stated, “Our storage bookings for the fiscal third quarter were negatively impacted by the Partial Tender Offer by the BKF Group in late January...which we observed to cause uncertainty and deferral of business opportunities among our resellers and end users.” The Form 10-Q also reported that Qualstar incurred fees of $641,000 during the quarter related to BKF’s tender offer and what it referred to as BKF’s “Potential Proxy Contest.”
BKF has given Qualstar notice that it intends to nominate a full slate of directors for election at Qualstar’s 2013 annual shareholders meeting. It is demanding the records relating to the earnings release and Form 10-Q so that it may communicate with Qualstar shareholders during its upcoming solicitation of proxies for the election of its slate regarding the statements made by Qualstar about BKF and its partial tender offer for Qualstar shares. BKF was forced to withdraw the tender offer after Qualstar adopted a so-called poison pill that effectively prevented BKF from acquiring shares in the offer. BKF is also seeking books and records to understand why, after almost fifteen months since the Company’s last annual meeting on March 21, 2012, a date for the 2013 annual meeting has not been announced.
Speaking about the Qualstar statements in the press release and the Form 10-Q, Steven N. Bronson, BKF’s chairman and chief executive officer said: “We find the Company’s statement that the third quarter results for its storage business were impacted by the BKF tender offer incredible, and we are asking the Company to provide us documentation in support of this curious assertion. We also find it hard to understand how the Company could have spent $641,000 on the BKF tender offer that was open for less than two weeks, and a proxy contest that had not even begun in the third quarter. BKF is concerned about what appears to us as a waste of corporate assets to entrench management, while the Company forecloses the right of shareholders to participate in a non-coercive tender and receive value for their shares.”
Mr. Bronson continued: “We are also concerned with the delay in holding the Company’s annual meeting. In prior years the Company has consistently held its annual meeting in March, or earlier. This year, the first since Mr. Firestone assumed office, it is already the end of May and a meeting date has yet to be announced. This appears to us as a ploy for entrenchment.”
Mr. Bronson concluded: “We hope the documents that we are requesting will shed light on the Company’s implausible assertions regarding BKF, and its troublesome decision to delay the annual meeting. We expect to be communicating about these matters with shareholders in the upcoming proxy contest.”
Participants in the Solicitation
The potential participants in a proxy solicitation by BKF in connection with the 2013 annual meeting of Qualstar shareholders are anticipated to include BKF Capital Group, Inc., a Delaware corporation, and, each of the individuals nominated by BKF for election as directors at the 2013 annual meeting: Steven N. Bronson, Alan B. Howe, Sean M. Leder, Dale E. Wallis and David J. Wolenski.
BKF is the record or beneficial owner of 2,239,419 shares of Qualstar common stock. Mr. Bronson is the beneficial owner of 57,700 shares, and may also be deemed to own beneficially the shares owned by BKF. Except for BKF and Mr. Bronson, none of the BKF participants owns any Qualstar securities.
Additional Information
BKF intends to make a filing with the Securities and Exchange Commission of a proxy statement and an accompanying proxy card to be used to solicit proxies in connection with the 2013 annual meeting of Qualstar shareholders. Shareholders are advised to read the definitive proxy statement and other documents related to the solicitation of shareholders for use at the 2013 annual meeting when they become available, because they will contain important information, including additional information relating to the participants in the proxy solicitation. When completed and available, BKF’s definitive proxy statement and a form of proxy will be mailed to Qualstar shareholders. These materials and other materials filed by BKF in connection with its proxy solicitation will be available at no charge on the SEC’s website at www.sec.gov. The definitive proxy statement and other relevant documents filed by BKF with the SEC will also be available, without charge, from BKF’s proxy solicitor, AST Phoenix Advisors. Call toll-free number (877) 478-5038.
About BKF Capital Group Inc.
BKF Capital Group Inc. is a publicly traded company that intends to create an asset management platform with investment vehicles that focus on areas of portfolio management that typically receive less attention from investors but also present unique investment opportunities. BKF is also engaged in seeking to arrange an acquisition, with an operating business with revenues, at least three years of operating history and unique value opportunities. For additional information please visit: www.bkfcapital.com.
Contacts
BKF Capital Group, Inc.
Maria Fregosi, 561-362-4199 x 209
mfregosi@bkfcapital.com
http://www.businesswire.com/news/home/20130528006520/en/CORRECTING-REPLACING-BKF-Capital-Announces-Demand-Qualstar
QBAK Comments on BKFG's Abrupt Termination of Its Unsolicited Partial Tender Offer (2/13/13)
Ended Bid Marks the Latest Failed Attempt by BKF Capital and Steven Bronson to Take Control of Qualstar Without Paying Shareholders an Appropriate Control Premium
SIMI VALLEY, CA--(Marketwire - Feb 13, 2013) - Qualstar Corporation (NASDAQ: QBAK), a manufacturer of data storage solutions and high-efficiency power supplies, today commented on the announcement by BKF Capital Group, Inc., an entity controlled by Steven N. Bronson, that it was abruptly terminating its unsolicited partial tender offer to purchase up to 3,000,000 shares of Qualstar's common stock, or approximately 24.5% of Qualstar's outstanding shares, for $1.65 per share in cash. Had the tender offer been completed and fully subscribed, BKF Capital and Mr. Bronson would have collectively owned approximately 43.2% of Qualstar's outstanding shares.
As BKF Capital indicated in its Schedule TO, one of the purposes of its unsolicited partial tender offer was to obtain a "controlling influence" over Qualstar. This is not the first time that BKF Capital and its controlling shareholder, Mr. Bronson, have failed in their attempt to gain control of Qualstar without paying shareholders an appropriate control premium. Last June, BKF Capital and Mr. Bronson failed in their efforts to replace the entire membership of the Qualstar Board with their "hand-picked" nominees. In addition, BKF Capital and Mr. Bronson have notified Qualstar that they will pursue another proxy contest to replace the entire Qualstar Board with their hand-picked nominees at this year's annual shareholder meeting. As such, shareholders can expect to be faced with yet another attempt by BKF Capital and Mr. Bronson to take control of Qualstar without paying shareholders any premium for such control. In the weeks ahead, Qualstar intends to communicate further with its shareholders with respect to the choices that will be before them at this year's annual shareholders meeting.
Lawrence D. Firestone, Qualstar President and Chief Executive Officer, said, "As we continue to execute our strategic turnaround plan for Qualstar, with positive results already reported, Mr. Bronson and BKF Capital have once again caused us a needless and wasteful distraction. In first commencing their ill-advised partial tender offer and then abruptly terminating it, they have forced our Board and management team to devote significant resources -- including management time and shareholder money -- to protect the interests of ALL shareholders, when these resources could have been better devoted to our ongoing efforts to transform Qualstar. We remain committed to transforming and refocusing Qualstar on its growing core storage and power supply businesses and, accordingly, driving sustainable revenue, profitable growth and increasing returns for ALL shareholders."
On the evening of February 11, 2013, BKF Capital filed with the U.S. Securities and Exchange Commission an amendment to its Tender Offer Statement on Schedule TO terminating its partial tender offer. The termination of the tender offer occurred just hours before Qualstar was planning to file its Solicitation / Recommendation Statement on Schedule 14D-9 which would have contained its Board's recommendation to shareholders as to whether to tender their shares into BKF Capital's offer and the reasons for such recommendation. While the tender offer's termination eliminated the need for the Qualstar Board to make a recommendation or file a Schedule 14D-9 with the SEC, shareholders should be aware that it is the unanimous view of the Qualstar Board, after careful review and consideration, and in consultation with its financial and legal advisors, that BKF Capital's unsolicited partial tender offer was inadequate and was not in the best interests of Qualstar and all of its shareholders.
In reaching its view that BKF Capital's unsolicited partial tender offer was not in the best interests of all Qualstar shareholders, the Qualstar Board considered numerous factors, including, but not limited to, the following:
•The Qualstar Board's belief that the continued implementation of Qualstar's strategic plan, under the leadership of its new President and CEO, Lawrence D. Firestone, will generate greater value for shareholders than would have been realized by BKF Capital's partial tender offer. The Qualstar Board took into account the swift and decisive actions that have been taken under Qualstar's new leadership to (i) transform Qualstar's value proposition from being a manufacturing-based company to a more nimble, lower overhead company focused on engineering and sales, (ii) enhance its prospects for growth and value creation, and (iii) create a platform for long-term growth, sustainable profitability, market leadership and increasing returns for investors. The Qualstar Board also took into consideration that, as a result of the efforts spearheaded by its new leadership, less than two fiscal quarters into the implementation of Qualstar's refocused strategy, Qualstar has made significant and substantial progress and is starting to realize the benefits of many of the actions that its new leadership has implemented to transform and refocus Qualstar;
•The Qualstar Board's belief that BKF Capital's partial tender offer was inadequate, and, in not paying shareholders an appropriate control premium for their shares, did not provide full and fair value for ALL outstanding Qualstar shares. As BKF Capital noted in its Schedule TO, the offer price represented the price at which it was willing to purchase shares and not an assessment of the shares' value. BKF Capital also indicated that it arrived at the offer price with the intention of making a profit from the ownership of the shares and that its objective was to establish the lowest price that might be acceptable to shareholders;
•The Qualstar Board's belief that BKF Capital's partial tender offer was opportunistically timed to (i) take advantage of Qualstar's depressed stock price which is at historically low levels, and (ii) allow BKF Capital to acquire shares of Qualstar at an inadequate price before the market recognizes Qualstar's potential for growth and value creation as Qualstar, under its new leadership, continues to implement a strategic plan for transforming Qualstar;
•That the Qualstar Board had received the opinion of Needham & Company, LLC, Qualstar's financial advisor, that as of February 11, 2013 and subject to and based on the assumptions, qualifications and other considerations set forth in its opinion, BKF Capital's offer price was inadequate, from a financial point of view, to Qualstar's shareholders (other than BKF Capital and its affiliates);
•The Qualstar Board's belief that BKF Capital's partial tender offer as a partial bid was structurally and inherently coercive; and
•BKF Capital's partial tender offer was subject to numerous conditions, which created significant uncertainty about whether the offer would be consummated and a number of the conditions gave BKF Capital wide latitude not to consummate its tender offer.
Needham & Company, LLC is acting as financial advisor to Qualstar and Stradling Yocca Carlson & Rauth, P.C. and Alston & Bird LLP are acting as legal advisors to Qualstar.
About Qualstar Corporation
Qualstar, founded in 1984, is a diversified electronics manufacturer specializing in data storage and power supplies. Qualstar's products are known throughout the world for high quality and Simply Reliable designs that provide years of trouble-free service. More information is available at www.qualstar.com or www.n2power.com or by phone at 805-583-7744.
Cautionary Statement Concerning Forward-Looking Statements
This press release contains forward-looking statements relating to expectations, plans or prospects for Qualstar Corporation that are based upon the current expectations and beliefs of Qualstar's management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Notwithstanding changes that may occur with respect to matters relating to any forward looking statements, Qualstar does not expect to, and disclaims any obligation to, publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Qualstar, however, reserves the right to update such statements or any portion thereof at any time for any reason. In particular, the following factors, among others, could cause actual or future results to differ materially from those suggested by the forward-looking statements: Qualstar's ability to successfully execute on its strategic plan and meet its long-term financial goals; Qualstar's ability to successfully implement and recognize cost savings; Qualstar's ability to develop and commercialize new products; industry and customer adoption and acceptance of Qualstar's new products; Qualstar's ability to increase sales of its products; the rescheduling or cancellation of customer orders; unexpected shortages of critical components; unexpected product design or quality problems; adverse changes in market demand for Qualstar's products; increased global competition and pricing pressure on Qualstar's products; and the risks related to actions of activist shareholders, including the amount of related costs.
For further information on these and other and other cautionary statements, please refer to the risk factors discussed in Qualstar's filings with the U.S. Securities and Exchange Commission including, but not limited to, Qualstar's Annual Report on Form 10-K for the fiscal year ended June 30, 2012, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of such Form 10-K, and any subsequently filed reports. All documents also are available without charge through the SEC's website (www.sec.gov) or from Qualstar's website (www.qualstar.com).
Additional Information And Where To Find It
Qualstar, its directors and certain of its executive officers and employees may be deemed to be participants in the solicitation of proxies from shareholders in connection with Qualstar's 2013 Annual Meeting of Shareholders (the "2013 Annual Meeting"). Qualstar plans to file a proxy statement with the SEC in connection with the solicitation of proxies for the 2013 Annual Meeting (the "2013 Proxy Statement"). SHAREHOLDERS ARE URGED TO READ THE 2013 PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT QUALSTAR WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Additional information regarding the identity of these potential participants and their direct or indirect interests, by security holdings or otherwise, will be set forth in the 2013 Proxy Statement and other materials to be filed with the SEC in connection with the 2013 Annual Meeting. This information can also be found in Qualstar's Annual Report on Form 10-K for the year ended June 30, 2012, filed with the SEC on September 21, 2012 (as amended with the filing of a Form 10-K/A on October 29, 2012), and in Qualstar's definitive proxy statement for its 2012 Annual Meeting of Shareholders, filed with the SEC on February 13, 2012. To the extent holdings of Qualstar's securities have changed since the amounts shown in the Form 10-K/A filed on October 29, 2012, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC.
Shareholders will be able to obtain, free of charge, copies of the 2013 Proxy Statement and any other documents filed by Qualstar with the SEC in connection with the 2013 Annual Meeting at the SEC's website (www.sec.gov), at Qualstar's website (www.qualstar.com) or by writing to Mr. Lawrence D. Firestone, President and Chief Executive Officer, Qualstar Corporation, 3990-B Heritage Oak Court, Simi Valley, CA 93063. In addition, copies of the proxy materials, when available, may be requested from Qualstar's proxy solicitor, MacKenzie Partners, Inc., 105 Madison Avenue, New York, NY 10016 or toll-free at (800) 322-2885.
Contact Information
For more information, contact:
Mark H. Harnett / Paul Schulman
MacKenzie Partners, Inc.
212) 929-5500
Vanessa Lehr/Annie Leschin
Investor Relations
StreetSmart Investor Relations
(415) 775-1788
http://www.marketwire.com/press-release/qualstar-corporation-comments-on-bkf-capitals-abrupt-termination-its-unsolicited-partial-nasdaq-qbak-1756542.htm
BKFG Terminates Offer to Acquire Qualstar Shares On Account of Adoption of Rights Plan (2/11/13)
Will Focus Efforts on Replacing the Qualstar Board at the Upcoming 2013 Annual Meeting
BOCA RATON, Fla.--(BUSINESS WIRE)--BKF Capital Group, Inc. (OTCQB – “BKFG”) today announced that it is terminating its offer to acquire up to 3,000,000 shares of Qualstar Corporation (NASDAQ — “QBAK”) because of the recently announced adoption by Qualstar of a shareholder rights plan. The adoption of the rights plan effectively makes it impossible to consummate the offer, since the acquisition of shares in the offer would trigger the exercisability of the rights under the plan.
As disclosed in its offering materials, BKF is currently Qualstar’s second largest shareholder. BKF commenced the offer to obtain a controlling influence over the company and to improve the prospects for the election of its candidates to the Qualstar board of directors at the company’s 2013 annual meeting of shareholders. BKF intends to pursue the election of its nominees at the 2013 annual meeting of shareholders, so that shareholders can choose whether they wish to replace the current board that continues to accumulate losses and that is foreclosing from shareholders the opportunity to decide for themselves whether to accept the BKF offer. Qualstar has never held its annual meeting later than the last week of March, and BKF expects that the board will convene the annual meeting this year no later than that.
BKF has today filed an amendment to its Form TO with the Securities and Exchange Commission to amend its offer by adding a condition that the rights plan be either waived, withdrawn or terminated, so as to allow the BKF offer to be consummated. But because it is apparent that the Qualstar board has no intention of doing so, BKF is also terminating the offer. BKF does not, however, concede that the rights plan was validly adopted under California law.
Responding to the board’s action to thwart BKF’s tender offer and shareholder choice, Steven Bronson, CEO and President of BKF made the following comments:
“We are disappointed that Qualstar has decided to adopt a poison pill to prevent shareholders from deciding for themselves whether to accept the BKF offer. BKF contemplated suing Qualstar over the rights plan. But we concluded that a lawsuit would benefit the company’s lawyers, but would not create value for shareholders. We therefore decided to withdraw our offer and focus our efforts and money on replacing Qualstar's board at the next annual meeting.
“We candidly stated in our offer materials that we were making the offer to obtain a controlling influence over the Company and to improve the prospects for election of our candidates at the 2013 annual meeting. We believe that the board has adopted the rights plan to entrench itself and management, and that shareholders should take account of this when it comes time to vote at the annual meeting.
“We believe the board’s action in adopting the rights plan is part of a continuing pattern of Qualstar’s lack of regard for shareholder interests, about which BKF is deeply concerned. In June 2012, BKF conducted a proxy contest to remove the incumbent board, including CEO Larry Firestone. A majority of shareholders voting cast their ballots to oust the board and supported the platform of BKF to return capital to the shareholders and explore strategic options for the data storage business.
“The board did not get the message. Instead of taking a hard strategic look at the tape storage business, the board is continuing to throw money at it. (After subsequent analysis, BKF has come to the conclusion that unless Qualstar can align itself with a strategic partner that brings capital and distribution channels to the table, it should exit the commoditized business of the data storage space.) Instead of returning excess cash to shareholders, the board appears to be pursuing a veiled acquisition strategy.
“The company touts a five year strategic plan, but continues to run at a substantial loss. The company broadcasts its cost cutting measures, but does not flag for you the substantial shareholder dollars that Mr. Firestone is spending on lawyers, financial advisors, proxy solicitors, investor relation firms, and recruiters.
“Then there is Mr. Firestone’s own compensation. By adopting the rights plan, the board is depriving shareholders of the opportunity to accept $1.65 for their shares, which represents a 16% premium to the 90 calendar day average trading price prior to the announcement of the BKF offer. Yet the board had no problem in January of this year issuing Mr. Firestone 100,000 options at a strike price of $1.44 per share. The company had previously granted to Mr. Firestone 100,000 options at a price of $1.94 per share. Apparently, while the board is unwilling to allow its shareholders to take advantage of an offered 16% premium for their shares, it has no issue with rewarding its CEO for a 25% drop in the company’s market value since he took office. The board also had no problem awarding Mr. Firestone a severance package that, if valid, would require the company to pay Mr. Firestone over 5% of the company’s liquid assets!
“This board, including Mr. Firestone, has made virtually no investment in the company. In contrast, the interests of BKF are aligned directly with the interests of all shareholders. BKF and I have invested approximately $3.8 million in the company, and if it were not for the rights offering, BKF would have committed up to an additional $5 million. We therefore look forward to the support of shareholders at the 2013 annual meeting, where we will be seeking to replace the current board with BKF’s nominees and at long last provide shareholders with a board that we believe will be representative of shareholder interests.”
About BKF Capital Group Inc.
BKF Capital Group Inc. (OTCQB - "BKFG") is a publicly traded company seeking entrepreneurial acquisition opportunities. BKFG also has two subsidiaries, one registered as an investment advisor and another acting as a general partner of a limited partnership investment fund focusing on micro- and small-cap companies that are potentially undervalued. For additional information please visit: www.bkfcapital.com.
Contacts
BKF Capital Group, Inc.
Maria Fregosi 561-362-4199
mfregosi@bkfcapital.com
http://www.businesswire.com/news/home/20130211006114/en/BKF-Terminates-Offer-Acquire-Qualstar-Shares-Account
QBAK Board of Directors to Review Unsolicited Tender Offer From BKF (1/31/13)
Shareholders Advised to Not Take Action Pending Review
SIMI VALLEY, CA--(Marketwire - Jan 31, 2013) - Qualstar® Corporation (NASDAQ: QBAK) today confirmed that Steven Bronson and BKF Capital Group have commenced an unsolicited tender offer to acquire 3 million shares of Qualstar Corporation at a price of $1.65 per share.
Qualstar's Board of Directors, in consultation with its financial and legal advisors, will carefully review and consider the unsolicited tender offer to determine the course of action that it believes is in the best interests of the Company and its shareholders. The Board intends to advise shareholders of its formal recommendation within ten business days by making available to shareholders and filing with the Securities and Exchange Commission a solicitation/recommendation statement on Schedule 14D-9. Qualstar's shareholders are advised to take no action at this time pending the review of the tender offer by the Company's Board.
About Qualstar Corporation
Qualstar, founded in 1984, is a diversified electronics manufacturer specializing in data storage and power supplies. The company's products are known throughout the world for high quality and Simply Reliable designs that provide years of trouble-free service. More information is available at www.qualstar.com or www.n2power.com or by phone at 805-583-7744.
Important Additional Information
Qualstar's shareholders are strongly advised to carefully read Qualstar's solicitation/recommendation statement, when it becomes available, regarding the tender offer referred to in this press release, because it will contain important information. Free copies of the solicitation/recommendation statement, which will be filed by Qualstar with the SEC, will be available at the SEC's web site at www.sec.gov, or at Qualstar's web site at www.qualstar.com or can be obtained by calling the Company at 805-583-7744.
http://www.marketwire.com/press-release/qualstars-board-of-directors-to-review-unsolicited-tender-offer-from-bkf-nasdaq-qbak-1752067.htm
GAMCO Investors, Inc owns 373,000 beneficial shares (11/09/12)
Controls 5.01 percent.
http://sec.gov/Archives/edgar/data/9235/000080724912000338/bkfg_00.htm
BKFG Outlines New Strategy & Maria Fregosi Rejoins Team (8/02/12)
BOCA RATON, Fla.--(BUSINESS WIRE)--BKF Capital Group, Inc. (OTCQB: BKFG), today announced that it is taking steps to maximize shareholder value by returning to the Company’s roots in asset management. BKF is in the initial stages of forming a subsidiary that will register as an investment advisor and a subsidiary that will act as general partner of a limited partnership investment fund. In the near-term, BKF expects to seed the limited partnership fund which will focus on small-cap and micro-cap companies based on a value approach to investing. Over the long term, BKF intends to grow its asset management business by acquiring or seeding other alternative investment funds with unique investment strategies and/or emerging portfolio managers. BKF’s goal is to grow revenues and income over time and achieve valuation multiples in line with other publicly-traded comparable companies.
BKF plans to create value for its shareholders by rebuilding its asset management operations, and expects to earn fee income for assets under management. BKF also plans to generate income from performance fees upon successfully liquidating investments and from its proprietary capital investments in the investment funds for which BKF acts as the general partner. Moreover, BKF has substantial net operating loss carry-forwards that it may be able to use to offset future profits and thereby minimize tax liabilities.
In furtherance of its new business strategy, BKF has rehired Maria Fregosi to serve as BKF’s Chief Operating Officer. Ms. Fregosi has been involved with investment banking and financial company management for over 20 years.
About BKF Capital Group Inc.
BKF Capital Group Inc. (OTCQB – “BKFG”) is a publicly traded company that intends to create an asset management platform with investment vehicles that focus on areas of portfolio management that typically receive less attention from investors but also present unique investment opportunities. BKF is also engaged in seeking to arrange an acquisition, with an operating business with revenues, at least three years of operating history and unique value opportunities. For additional information please visit: www.bkfcapital.com.
Forward-Looking Statements
Statements concerning the future business, operating results and financial condition of BKF are "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements are based upon management’s current expectations and are subject to a number of uncertainties that could cause actual performance and results to differ materially from the results discussed in the forward-looking statements. Factors that could affect BKF’s actual results include general market conditions, the performance of target companies and the Company’s ability to obtain regulatory approvals for its business structure. BKF undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Further information on these and other potential factors that could affect BKF’s financial results or condition are included in BKF’s filings with the Securities and Exchange Commission. In particular, reference is made to the “Risk Factors” section of BKF’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.
Contacts
BKF Capital Group, Inc.
Greg Heller, 561-362-4199 x 330
gheller@bkfcapital.com
http://www.businesswire.com/news/home/20120802005096/en/BKF-Capital-Group-Outlines-Strategy-Maria-Fregosi
The Ancora Group, Inc owns 374,217 shares (6/28/12)
Controls 5.03 percent.
http://sec.gov/Archives/edgar/data/9235/000116204412000636/ancorasc13d201207.htm
BKFG Comments on Release of Results of Qualstar Special Meeting (6/28/12)
Overwhelming Majority of Disinterested Shareholders Support BKF
BOCA RATON, Fla.--(BUSINESS WIRE)--BKF Capital Group, Inc. (OTCQB: BKFG), commented today on the release of the definitive results of the Special Meeting of Shareholders of Qualstar Corporation (NASDAQ: QBAK) called by BKF to remove and replace the current Qualstar directors. Although BKF did not receive the majority of votes outstanding necessary to effect the removal, a clear majority (52.3%) of the votes cast at the Special Meeting were in support of the BKF platform. Moreover, fully two-thirds of the votes cast by disinterested shareholders—shareholders other than management and outgoing chairman and CEO William Gervais and BKF—were in favor of the BKF proposals to remove and replace the Board.
Speaking about the results, Steven N. Bronson, BKF’s chairman and chief executive officer said: “While we are disappointed that we were unable to remove and replace the Qualstar Board at this time, we are gratified that a majority of the shares represented at the Special Meeting—and the overwhelming majority of disinterested shareholders—voted with BKF. If this were a contest to elect directors at an annual meeting, based on these results, the BKF nominees would have prevailed.”
Mr. Bronson continued: “We believe that shareholders clearly understood our message. We never advocated a break-up of the Company. What we and the other shareholders demand is a return to profitability by rationalizing the tape library business and focusing on the power supply business; a dividend and distribution program that returns excess cash to shareholders; and management compensation aligned with shareholder interests.”
BKF continues to explore its legal options following the Company’s failure to recognize BKF’s motion to adjourn the Special Meeting. In making the motion, BKF cited problems with street name voting that came to its attention shortly before the meeting. Based on the meeting results, BKF believes a majority of the shares present at the Special Meeting would have been cast in favor of adjournment had the motion been allowed.
About BKF Capital Group Inc.
BKF Capital Group Inc. (OTCQB - "BKFG") is a publicly traded company focused on arranging a merger, acquisition, business combination or other arrangement with both public and private companies with unique value opportunities and/or acquiring a controlling position in such companies through equity purchases or debt financings. For additional information please visit: www.bkfcapital.com.
Contacts
BKF Capital Group, Inc.
Greg Heller, 561-362-4199 x 330
gheller@bkfcapital.com
http://www.businesswire.com/news/home/20120628005341/en/BKF-Capital-Comments-Release-Results-Qualstar-Special
Submission of Matters to a Vote of Security Holders (Form 8-K/A)
http://sec.gov/Archives/edgar/data/758938/000143774912006435/qualstar_8ka-062012.htm
BKFG Moves to Adjourn Qualstar Special Meeting Citing Problems with Street Name Voting (6/20/12)
Majority of Votes Cast Appear to Favor BKF Proposals
BOCA RATON, Fla.--(BUSINESS WIRE)--BKF Capital Group, Inc. (OTCQB: BKFG), announced that, at the Special Meeting of Shareholders of Qualstar Corporation (NASDAQ: QBAK) today called by BKF to remove and replace the current Qualstar directors, BKF moved to adjourn the meeting for a period of two weeks to Thursday, July 5, 2012 because of issues with street name voting. The Company refused to recognize BKF’s motion and challenged BKF to take legal action. BKF is now considering its legal alternatives.
In moving to adjourn the Special Meeting, BKF cited problems with street name voting that came to its attention shortly before the meeting. These problems appear to have resulted either in votes being misdirected or not allowing shareholders sufficient time to cast their vote. In one case, if not caught, these problems would have resulted in almost 900,000 votes not being cast in favor of the BKF proposals.
Under the Qualstar bylaws, a shareholders meeting may be adjourned from time to time by the vote of a majority of the shares whose holders are either present in person or represented by a proxy. Based on a preliminary tally, BKF understands that a majority of the shares present at the Special Meeting would have been cast in favor of adjournment had the motion been allowed.
Also based on a preliminary tally, BKF understands that a majority of the shares voted as of the time of the Special Meeting were cast in favor of the BKF proposals, although this was less than the absolute majority needed to remove the current directors. Irrespective of BKF’s motion for adjournment, BKF believes that this sends a powerful message to the Qualstar board that shareholders will no longer tolerate a status quo of annual losses, declining revenue and depressed market value. BKF also believes that the preliminary tally demonstrates solid support for BKF’s demand to return excess cash to shareholders.
In light of today’s developments, BKF encourages management to sit down with BKF to arrive at a mutually acceptable resolution that will provide for appropriate representation of BKF on the Company’s board and that will address the other issues raised by BKF during its campaign.
About BKF Capital Group Inc.
BKF Capital Group Inc. (OTCQB - "BKFG") is a publicly traded company focused on arranging a merger, acquisition, business combination or other arrangement with both public and private companies with unique value opportunities and/or acquiring a controlling position in such companies through equity purchases or debt financings. For additional information please visit: www.bkfcapital.com.
Contacts
BKF Capital Group, Inc.
Greg Heller, 561-362-4199 x 330
gheller@bkfcapital.com
http://www.businesswire.com/news/home/20120620006578/en/BKF-Moves-Adjourn-Qualstar-Special-Meeting-Citing
QBAK Announces Preliminary Voting Results For The June 20 Special Meeting Of Shareholders (6/20/12)
BKF FALLS SHORT IN ITS ATTEMPT TO TAKE OVER BOARD AND BREAK UP COMPANY
SIMI VALLEY, Calif., June 20, 2012 /PRNewswire/ -- Qualstar Corporation (Nasdaq: QBAK) today announced that, based on preliminary voting results, BKF Capital Group did not obtain the required votes and thus failed in its attempt to take over the Qualstar board. Certified voting results are expected from the independent inspector within the next 5 days.
"We thank our shareholders for their support and confidence in our board and management team to continue to execute our turnaround strategy that is already underway at Qualstar," said Lawrence Firestone, Qualstar's chief executive officer. "We are pleased to have this disruption behind us so we can devote our full attention to the operation of our business and the execution of the turnaround plan."
Firestone continued, "Shareholders made the correct decision to reject BKF's unwarranted campaign to take over the company. Our Board remains committed to returning Qualstar to sustainable profitability and growth."
The preliminary voting results from today's Special Meeting of Shareholders are based on the advice of Qualstar's proxy solicitor.
About Qualstar Corporation:
Qualstar, founded in 1984, is a diversified electronics manufacturer specializing in data storage and power supplies. The company's products are known throughout the world for high quality and Simply Reliable designs that provide years of trouble-free service. More information is available at www.qualstar.com or www.n2power.com.
SOURCE Qualstar Corporation
http://www.prnewswire.com/news-releases/qualstar-announces-preliminary-voting-results-for-the-june-20-special-meeting-of-shareholders-159762205.html
Today is the day, will be watching to see how it pans out, if BKF is successful or not.
BKF Capital Issues Open Letter to Qualstar Board — “There You Go Again” Distorting the Facts and Distracting Shareholders from the Issues (6/15/12)
BOCA RATON, Fla.--(BUSINESS WIRE)--BKF Capital Group, Inc. (OTCQB—BKFG) today released an open letter to the Board of Directors of Qualstar Corporation (NASDAQ—QBAK) in advance of a Special Meeting of Shareholders on June 20, 2012 to remove and replace the Qualstar Board. In the letter, BKF accuses the Board of once again distorting the truth about BKF and its principal, Steven Bronson, in an attempt to distract shareholders from the real issues of continually dismal performance, the problems of a business segment in decline that the Board has failed effectively to address and a purported turnaround strategy fraught with acquisition risk.
The full text of the letter follows.
June 15, 2012
To the Directors of Qualstar Corporation:
“There you go again.”
Yesterday you issued a press release with the eye-catching but utterly misleading title, “Qualstar Sets the Record Straight Regarding Steven Bronson’s Experience and BKF’s True Interests.” It is clear to us that, once again, your distortions and half-truths are simply an attempt to distract the attention of Qualstar shareholders from the real issues and problems that have plagued the Company on your watch. We address each of your errant claims below, but first focus on the real issues and problems from which the Board is apparently attempting to deflect shareholder attention.
Setting the Real Record Straight
BKF has called for the Special Meeting of Shareholders on Wednesday, June 20, 2012 to remove and replace the Qualstar Board, a program endorsed by Institutional Shareholder Services (ISS), the premier proxy advisory firm. BKF is urging Qualstar shareholders to promptly return their GOLD proxy cards to vote FOR the proposals of BKF to remove and replace the Board—
•Because, under the watch of the current Board, the Company has extended a continuous streak of unprofitability that began in 2004;
• Because, under the watch of the current Board, the Company’s net revenues have continued to decline, so that they were 42% less in 2011 than they were in 2004;
• Because, under the watch of the current Board, the Company’s stock price has continued to decline, so that is it over 60% lower than it was 10 years ago on a dividend adjusted basis;
• Because, under the watch of the current Board, the Company’s Tape Library business continues to lose money, dragging down the fortunes of the Company;
• Because the Board is touting an acquisition strategy when it has been incapable of profitably running its primary legacy business;
• Because pursuit of acquisitions as a cover for failed management of existing businesses is a tried and true prescription for financial disaster;
• Because the Board is refusing to make a distribution to its shareholders of excess cash, instead proposing to risk that cash on an unspecified and unproven program of acquisitions as part of a dangerous turnaround strategy;
• Because, with the departure of Mr. Gervais today, the current Board owns less than 1.3% of the outstanding shares;
• Because, at the recent annual meeting of shareholders, 3 of 5 directors failed to get a majority of the votes and a substantial number of shareholders withheld their votes from the other two;
• Because the current Board has just hired as the new CEO one of its own members with no experience as the CEO of a public company, and has guaranteed him payments in the first year of $455,000 not tied to performance; and
• Because for all of these reasons, we do not trust you when you say that at long last you are going to turn the fortunes of our Company around.
Even Glass Lewis, whose recommendation you continue to tout, has said—
[The Glass Lewis] view should not be construed as an endorsement of management or its recent efforts, which, as noted at length [in the Glass Lewis report] have failed to generate attractive value for the Company's shareholders.
Correcting Distortions of the Record
While we see your tactics for what they are, we are compelled nonetheless to address your most recent distortions and ill-informed and misleading accusations again BKF and Mr. Bronson.
Mikron Infrared, Inc.
Mr. Bronson was appointed to the Mikron board in September 1996 and became chairman and chief executive officer in August 1998, without taking a salary, to lead the company's effort of exploring strategic alternatives. He and the board determined that the best course for the company was to recruit an experienced management team, which he did. Notably, Mr. Bronson required that the management team invest their own money in company stock, which they did at a 150% premium to then current market. (Compare this with the compensation package that the Qualstar Board has handed to its new CEO, Mr. Firestone.) The management team recruited by Mr. Bronson successfully turned Mikron around, increasing its value by over 1000%. Isn’t that exactly what we want for Qualstar?
The lawsuit subsequently brought by an affiliate of Mr. Bronson against Mikron was for the breach of an advisory contract, which the company settled by making a cash payment to the affiliate. What, we ask, is wrong with that?
4Net Software
When Mr. Bronson purchased a 50.1% interest in this company in June 1996, it had only cash of less than $250,000 and its stock was almost worthless ($.00125 per share, to be exact). Mr. Bronson invested money in the company for a software business, which was then hit with the dot.com bubble of 2000. Mr. Bronson did the rational thing at the time of discontinuing this business. This is just the kind of sensible business judgment that appears to be lacking on the current Qualstar Board.
Ridgefield Acquisition Corp.
When Mr. Bronson bought control of Ridgefield in March 2000, the company had already disposed of its operations, and shareholders’ equity was under $450,000. Mr. Bronson grew that shareholders’ equity to over $800,000 as of March 31, 2011, after which the company made a cash distribution to shareholders. What exactly is the problem with this? Yes, Mr. Bronson increased his equity ownership to 82%, but he did so through cash investments and exercise of warrants, in each case with a value, or a strike price at the time of issuance, at or above market. More to the point, Mr. Bronson invested in both Ridgefield and 4NetSoftware as financial plays; they were not operating businesses. It is difficult to see any relevance of these companies to Qualstar.
Interlink Electronics Inc.
The one company that the Board has stopped talking about is Interlink, which has actual relevance to Qualstar. This is an operating company that had been losing money for ten years, that Mr. Bronson took control of in 2010 and is now poised for its first profitable year in over ten years.
The 40 Act
The Board is most shrill with its dire predictions of BKF having to dispose of its interest in Qualstar because of issues under the Investment Company Act of 1940 and its fantasy of BKF’s seeking only to extract a dividend from the Company before it is required to sell its shares.
We have said it before, and we will say it again, BKF believes it is unlikely that it will be required to dispose of its shares. What is apparent to us from the Board’s rant is that the Board knows little about BKF, little about its plans and little about the Investment Company Act.
The Conclusion
The noise that the Board is seeking to generate did not fool ISS, which recommended in favor of BKF’s program to remove and replace the Board, nor should it fool the Company’s shareholders. To restore value and for a Board whose interests are aligned with shareholders, shareholders should vote their GOLD proxy cards in favor of the BKF program.
BKF Capital Group, Inc.
Greg S. Heller
Senior Vice President
About BKF Capital Group Inc.
BKF Capital Group Inc. (OTCQB - "BKFG") is a publicly traded company focused on arranging a merger, acquisition, business combination or other arrangement with both public and private companies with unique value opportunities and/or acquiring a controlling position in such companies through equity purchases or debt financings. For additional information please visit: www.bkfcapital.com.
Qualstar shareholder with questions should contact BKF’s proxy advisors—
PHOENIX ADVISORY PARTNERS
110 Wall Street
27th Floor
New York, NY 10005
Call Toll Free: (877) 478-5038
Banks And Brokers Call Collect: (212) 493-3910
No matter how many shares you own, your vote is extremely important.
You can take control of your Company’s future, but for democracy to work you have got to vote.
We need an absolute majority to win.
Doing nothing is the same as a vote for a Board that has failed you in the past.
Please vote your GOLD proxy card and support the BKF slate.
Do not return a WHITE proxy card or any other card sent to you on behalf of the current Board.
http://www.businesswire.com/news/home/20120615005715/en/BKF-Capital-Issues-Open-Letter-Qualstar-Board
Contacts
BKF Capital Group, Inc.
Greg Heller, 561-362-4199 x 330
gheller@bkfcapital.com
BKFG Issues Open Letter to Qualstar Shareholders (6/13/12)
Says Qualstar Stalls on Production of Accounting Records and Misleads on Experience of New CEO
BOCA RATON, Fla.--(BUSINESS WIRE)--BKF Capital Group, Inc. (BKFG) today released an open letter to shareholders of Qualstar Corporation (NASDAQ—QBAK) in advance of a Special Meeting of Shareholders on June 20, 2012 to remove and replace the Qualstar Board. In the letter, BKF accuses Qualstar of stalling on the production of accounting records, which BKF believes are relevant to shareholder assessment of the performance of the Board in advance of the Special Meeting, and questions whether the Qualstar Board is trying to hide information from shareholders. BKF also challenges the Board’s characterization of the new CEO that it selected, who has never served in a chief executive capacity, as a “turnaround specialist.”
The full text of the letter follows.
June 13, 2012
Dear Fellow Qualstar Shareholders:
The Special Meeting of Shareholders to remove and replace the Board of Qualstar Corporation will be held on June 20, 2012. If you have not already done so, please promptly return your GOLD proxy card to vote FOR the proposals of BKF Capital Group, Inc. to remove and replace the Board, so that the BKF slate of nominees may begin to return value to shareholders.
It would seem that the current Board members have already given shareholders sufficient reasons to remove them from office — the destruction of the Company’s share value, the decline in operating performance, the outsized compensation of the new CEO, the distortions and half-truths regarding the BKF slate. But this Board keeps adding more.
Stalling on BKF’s Demand to Inspect Accounting Books and Records
BKF exercised its right under California law to demand inspection of Qualstar's accounting books and records, including the following items:
• compensation and expense reimbursement to directors and officers;
• payments for aircraft owned by directors and officers;
• legal services performed by the law firm of one of the directors;
• investment advice paid for by the Company; and
• executive recruitment and compensation consultants.
Qualstar has stalled in the production of these accounting records. BKF asked for these materials because we believed they are relevant to the shareholder’ assessment of the performance of the Board in advance of the Special Meeting. Qualstar’s legal counsel (who is also a director of the Company) refused to provide the records on a timely basis and threatened that it would take longer for BKF to obtain a court ordered inspection of these documents than waiting for Qualstar to comply. Because the Board is dragging its feet in the production of these materials, we have to ask: Does the Board have something to hide? Is there financial information or payments to management that the Board does not want shareholders to know with sufficient time to affect the vote at the Special Meeting?
Mr. Firestone, the Purported Turnaround Specialist
On June 12th, the Company issued a press release announcing, “Turnaround Specialist Engaged Full Time To Grow Qualstar Investment.” And just who is this “turnaround specialist?” Board member Lawrence Firestone, whom BKF is seeking to remove. Now, when we think of someone as a turnaround specialist, we think of a CEO type or a Chief Restructuring Officer, someone who runs the show and call the shots, not a CFO who keeps the books. Mr. Firestone’s primary experience, and all his experience in the last 12 years has been as a CFO — he has not in fact been at the helm of any turnaround situation. But if you really want to appreciate how this Board is trying to mislead you, consider this statement in the release:
[Mr. Firestone g]rew Advanced Energy Industries from a market capitalization of $500 million to over $1.1 billion in two years.
These are the real facts. Mr. Firestone became CFO of Advanced Energy Industries in August 2006. He left, under circumstances which appear to us to be not of his own choosing, in August 2010. During that time the stock price climbed to a high of $25.68 in May 2007, dropped to a low of $5.49 in March 2009, recovered to the $17.00 range as Mr. Firestone was leaving. Even assuming Mr. Firestone was responsible for these gyrations, is this a turnaround specialist?
It’s All About Trust
As much as this contest is about the failures of the current Board, it is also about trust.
• Can you trust a Board that has failed you in the past to work for you in the future?
• Can you trust a Board that says it has a turnaround plan when it feeds you distortions and half-truths?
• Can you trust a Board to implement an acquisition strategy when it has been unable to profitably operate Qualstar’s legacy Tape Library business?
• Can you trust a Board that tells you that BKF poses a risk to your investment, when BKF is proposing to return cash to shareholders in order to take risk off the table?
The answer to each of these questions, we believe, is that this Board cannot be trusted and must be removed in order to create value for all shareholders.
No matter how many shares you own, your vote is extremely important.
You can take control of your Company’s future, but for democracy to work you have got to vote.
We need an absolute majority to win.
Doing nothing is the same as a vote for a Board that has failed you in the past.
Please vote your GOLD proxy card and support the BKF slate.
DO NOT return a WHITE proxy card or any other card sent to you on behalf of the current Board.
If you have any questions, please contact our proxy advisors—
PHOENIX ADVISORY PARTNERS
110 Wall Street
27th Floor
New York, NY 10005
Call Toll Free: (877) 478-5038
Banks And Brokers Call Collect: (212) 493-3910
We look forward to your support.
BKF Capital Group, Inc.
Greg S. Heller
Senior Vice President
About BKF Capital Group Inc.
BKF Capital Group Inc. (OTCQB - "BKFG") is a publicly traded company focused on arranging a merger, acquisition, business combination or other arrangement with both public and private companies with unique value opportunities and/or acquiring a controlling position in such companies through equity purchases or debt financings. For additional information please visit: www.bkfcapital.com.
Contacts
BKF Capital Group, Inc.
Greg Heller, 561-362-4199 x 330
gheller@bkfcapital.com
http://www.businesswire.com/news/home/20120613006015/en/BKF-Capital-Issues-Open-Letter-Qualstar-Shareholders
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